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2022 (6) TMI 472 - AT - Income TaxCorrect head of income - interest on FD and gain of sale of mutual funds invested out of unutilized borrowed fund - interest earned from temporary fixed deposits and gains on sale of mutual funds during the pre-construction period could be treated as ‘Income from Other Sources’ or whether the same would qualify as ‘Capital Receipts’ and hence not in the nature of income - HELD THAT:- The assessee company which was formed primarily for the purpose of four laning of the Rohtak Panipat highway and the funds available with the assessee were to be utilised primarily for the above purposes for which the assessee company was set up. Consequentially, the interest / gains earned on fixed deposits/sale of mutual funds was also be to be utilised for the aforesaid purpose. Therefore, in our view, interest/gains earned by the assessee company during the pre-commencement was inextricably linked with the setting up of the capital structure of the assessee company and there was a direct nexus of the funds and income from interest and mutual funds out of the temporary investments and accordingly, the ld. CIT(A) has not erred in law in holding that receipts in question could not be taxed as “income from other sources” and “short term capital gains”. - Decided against revenue.
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