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TIDEL PARK LTD. Versus ASSISTANT COMMISSIONER OF INCOME-TAX

2015 (11) TMI 628 - ITAT CHENNAI

Interest income earned by the assessee - whether is an income chargeable under the head "Income from other sources"? - Held that:- Interest income earned through short-term deposits by investing the borrowed capital as income not connected with the construction and business activity of the assessee. The very same issue has also been considered by the hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997 (7) TMI 4 - SUPREME Court] and held that the inte .....

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are of the opinion that the interest income earned by the assessee is an income chargeable under the head "Income from other sources". - Decided against assessee. - I. T. A. No. 388 /Mds/ 2015 - Dated:- 19-8-2015 - A. MOHAN ALANKAMONY (Accountant Member) and V. DURGA RAO (Judicial Member) Viram Vijayaraghavan for the appellant. S. Dasgupta for the respondent. ORDER The order of the Bench was delivered by 1. V. Durga Rao (Judicial Member).-This appeal filed by the assessee is directed against th .....

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of business was effective from April 20, 1998. Letter of intent for joint venture was issued on January 14, 1999 and the project was approved by the Central Government on May 24, 1999. The assessee-company filed its return of income by admitting nil income. The return filed by the assessee was processed under section 143(1) of the Income-tax Act, 1961, on October 12, 2001 and thereafter, the assessment was completed under section 143(3) of the Act on February 28, 2003 by determining the interes .....

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he assessee preferred further appeal before the Income-tax Appellate Tribunal and relied on the decision of the hon'ble jurisdictional High Court in the case of CIT v. Franco Tosi Ingegneria [2000] 241 ITR 268 (Mad). The Income-tax Appellate Tribunal vide its order in I. T. A. No. 1814/Mds/2003 dated February 22, 2007 remitted the matter back to the Assessing Officer to decide the issue de novo. The Income-tax Appellate Tribunal further directed the Assessing Officer to decide the alternativ .....

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debentures and term loans from various banks. Funds which are not utilised immediately for the construction of the Tidel Park project and the funds are invested in various securities like ICICI Bank, PNB Gilts, etc. The assessee has received interest income from the above securities. Therefore, the Assessing Officer has held that interest income received from the securities is not inextricably linked with the setting up of business or construction activity of the Tidel Park and the receipt of t .....

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ed the order passed by the Assessing Officer. 5. On being aggrieved, the assessee is in appeal before the Tribunal. Learned counsel for the assessee has submitted that the Assessing Officer has failed to follow the directions of the Income-tax Appellate Tribunal and not considered the decision in the case of CIT v. Franco Tosi Ingegneria [2000] 241 ITR 268 (Mad). He has further submitted that once the assessee has set up business, it is eligible to claim expenditure even without commencement of .....

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Corporation and M/s. Electronic Corporation of Tamilnadu. This project was conceived for the promotion of software development in terms of creating infrastructure. The company was incorporated on December 2, 1997. Certificate for commencement of business was effective from April 20, 1998. Letter of intent for joint venture was issued on January 14, 1999 and the project was approved by the Central Government on May 24, 1999. 8. In the assessment order, the Assessing Officer has observed that the .....

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has observed that the interest income is not in any way connected with the construction of Tidel Park project. He further observed that the interest income received from the securities is not at all inextricably linked with the setting up of business or construction activity of the Tidel Park. The receipt of interest income is not at all directly linked to the construction activities and accordingly, the Assessing Officer has held that the interest income received by the assessee is revenue in n .....

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gs given by the Tribunal, has observed that "it is clear from the finding of the Tribunal that the assessee had in fact commenced operations on April 13, 1981, and incurred expenditure and the expenditure so incurred was pursuant to the letter of intent granted to it by the Neyveli Lignite Corporation. The assessee is, therefore, entitled to regard the expenditure so incurred as the expenditure incurred by it during the previous year relevant to the assessment year 1981-82". We find th .....

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