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TMI Blog2009 (12) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... d have gone through the orders of the Tribunal and that of the lower authorities. 2. Respondent is constituted by an Act of the State Legislature, namely, the Kerala Infrastructure Investment Fund Act, 1999. The Act was enacted to provide for constitution of a Fund for investments in infrastructure projects in the State and for matters connected therewith and incidental thereto. Under section 3 of the Act, the State Government framed a Scheme called the Kerala Infrastructure Investment Fund Scheme, 1999 for the establishment of a Fund under the Act by notification in the Official Gazette. Under section 4 of the Act, the Government was to constitute a Board called Kerala Infrastructure Investment Fund Board for the administration of the Fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and so much so, he assessed the interest income as income from other source under section 56 of the Income-tax Act. The Assessing Officer supported the assessments based on the decision of the Supreme Court in Tuticorin Alkali Chemicals & Fertilisers Ltd. v. CIT [1997] 227 ITR 172. However in appeal the CIT (Appeals) found that the under the provisions of the Act and Scheme, the setting up of the fund itself can be said to be commencement of business and so much so, the assessee is entitled to have interest income assessed as business income. On second appeal by the department, the Tribunal confirmed the orders of the CIT (Appeals) against which these appeals are filed. 3. The only question to be considered is whether the assessee can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on deposits of borrowed funds retained in Treasury accounts and in other Bank accounts. The question as to whether the assessee has commenced business or was carrying on business will depend upon the facts of each case. Infrastructure projects themselves are very few and respondent can fund the project only when it conforms to assessee's norms for eligibility. The fund required for infrastructure projects is substantial and, therefore, fund has to be first raised before identifying the project to be funded. Therefore, in our view, raising of fund for project financing itself is commencement of business because fund raised is nothing but working capital to be applied for business purposes. Respondent cannot be expected to immediately advance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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