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2017 (10) TMI 680 - AT - Income TaxInterest earned on fixed deposit - whether to be treated as capital receipt, hence, not taxable? - assessee claimed such interest as capital receipt and set it off against pre–operative expenditure - Assessing Officer assessed the interest as income from other sources - Commissioner (Appeals) having found that interest earned was inextricably linked with the setting–up of the power plant allowed the claim of the assessee - Held that:- Undisputedly, in case of assessee, the funds invested temporarily in the fixed deposit were for the purpose of setting–up of the power project. Therefore, the interest earned is inextricably linked with the power project. The other decisions relied upon by the learned Sr. Counsel including the decision in case of CIT v/s Karnal Co–operative Sugar Mills Ltd. (1999 (4) TMI 7 - SUPREME Court) express similar view. That being the case we hold that the interest earned on fixed deposit is capital receipt and has to be set–off against pre–operatives expenditure thereby will go to reduce the cost of CWIP. Ground raised by assessee is allowed.
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