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2017 (12) TMI 1353 - AT - Income TaxSet off the interest income against the preoperative expenses in its books of accounts - Held that:- In Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME Court) where the assessee had earned interest on advance paid to contractors during pre-commencement period was found to be 'inextricably linked' to the setting up of the plant of the assessee and hence was held to be a capital receipt which was permitted to be set off against pre-operative expenses. The very purpose of constitution of the Assessee was to act as a Special Purpose Vehicle (SPV) created by the Govt of India and Govt. of West Bengal in the form of Joint Venture with equal equity participation for implementation of rapid transport infrastructure in Kolkata. Both the Central and the State Governments are to provide requisite finances for implementation of the said project. The funds from the Central and State Governments flow directly to the Assessee company as equity and Subordinate Debt/Loans. The objective is to create and maintain a fund for the development of infrastructural assets on a continuing basis and, therefore, the Assessee is a SPV formed by the Government of India and Government of West Bengal as per the guidelines; there is no profit motive as the entire fund entrusted and the interest accrued therefrom on deposits in bank though in the name of the Assessee has to be applied only for the purpose of welfare of the State as provided in the guidelines. Therefore, considering the factual position discussed above, we are of the view that the Assessee has rightly set off the interest income against the preoperative expenses in its books of accounts and therefore we confirm the order passed by the ld CIT(A). - Decided against revenue
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