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2019 (4) TMI 1160 - AT - Income TaxInterest received on short term deposits - nature of receipts - deposits kept temporarily with Bank out of advances towards share capital from promoters during the construction period i.e., for purchase of land, grading and development thereof for industrial purposes, development of infrastructure, payment to consultants, civil contractors, advance payments to machinery suppliers, prior to the commencement of business - to be capitalized and set off in capital work-in-progress as contended by the assessee OR is to be taxed as income under the head “Income from Other Sources” as held by the authorities below - HELD THAT:- In the case of Indian Oil Panipat Power Consortium Ltd., Vs. ITO [2009 (2) TMI 32 - DELHI HIGH COURT] and the other decisions referred we are unable to sustain the view taken by the learned CIT(A) by placing reliance on the decision in the case of Tuticorin Alkalis Chemicals and Fertilizers Ltd. [1997 (7) TMI 4 - SUPREME COURT] . Respectfully following, inter alia, the decision of the Hon’ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd.,(supra), we hold that the interest income being the amount invested temporarily in short term deposits out of advance towards equity share capital by promoters are capital receipts and go to reduce the project cost of setting up the aromatic complex at MSEZ with which it is inextricably linked. We, therefore, reverse the findings rendered by the authorities below that the aforesaid interest is exigible to tax under the head “Income from Other Sources”. Consequently, the grounds raised by the assessee on this issue are allowed.
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