TMI Blog2012 (8) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... ts – capital receipt vs Income from other sources – Held that:- Since it has been held for AY 06-07 that assessee has set up the business and the revenue expenditure are allowed. That being so interest income cannot be considered as a capital receipt for AY 07-08. Also it is held in the case of M/s. Tuticorin Alkali Chemicals & Fertilisers Ltd v CIT (1997 (7) TMI 4 - SUPREME COURT) that interest income from deposits even during preoperative period is assessable as income from other sources. - ITA No. 137, 317 & 507/Hyd/11 - - - Dated:- 8-6-2012 - SHRI CHANDRA POOJARI, AND SMT. ASHA VIJAYARAGHAVAN, JJ. Assessee by : Mr. P. Murali Mohana Rao Revenue by : Mr. B.V. Prasad Reddy ORDER PER ASHA VIJAYARAGHAVAN, J.M.: The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sulting in a loss of equal amount. However the AO has disallowed the entire loss of Rs. 13,49,370/ claimed by the Assessee. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the CIT(A). 4. The CIT(A) in para 4.3 has held that the business of the Assessee has commenced and all revenue expenditure is to be allowed. He has however held that consultancy charges and legal charges are to be capitalised and auditor s remuneration and donations are to be allowed. Still aggrieved, the assessee is in appeal before us. 5. We have heard the arguments of both the parties, perused the record and gone through the orders of the authorities below. It is the contention of the Assessee that the CIT(A) has not considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above facts and circumstances, it is clear that the preoperative expenses are to be capitalized and have been correctly capitalized by the AO. Therefore, the question of allowing business loss does not arise. Aggrieved, the Assessee is in appeal before us. 8. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities below. We are unable to accept the conclusion of the CIT(A). For the AY 2006-07, the CIT(A) has concluded that the Assessee has set up business and hence certain expenditure are allowable as revenue deduction for the year. We cannot understand how for the subsequent year, for the year under this appeal the expenses of the Assessee should be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o we donot see how for the AY 200708 the interest income can be considered as a capital receipt. In any event the issue is squarely covered by the decision of the Apex Court inn the case of M/s. Tuticorin Alkali Chemicals Fertilisers Ltd v CIT (227 ITR 172) wherein it has been held that interest income from deposits even during preoperative period is assessable as income from other sources. The decisions relied on by the CIT(A) are distinguishable on facts. Respectfully following the decision of the Apex Court in the case of M/s. Tuticorin Alkali Chemicals Fertilisers Ltd v CIT (227 ITR 172), we set aside the decisions of the CIT(A) and restore the order of the AO treating the interest income of Rs. 22,75,642/- as income from other so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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