TMI Blog2011 (2) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... AL MINES LTD. [ 2009 (9) TMI 1016 - DELHI HIGH COURT] . In the aforesaid two judgments of this Court after discussing the legal principle in detail, the Court has held that if the interest earned on the fund which are to be utilized for purchase of capital asset/ setting up of the business and that is inextricably linked with the setting up of the business, said interest will not be treated as income under the head income from other sources . While coming to this conclusion the Court has specifically referred to the judgment of Supreme Court in the case of COMMISSIONER OF INCOME-TAX VERSUS BOKARO STEEL LIMITED [ 1998 (12) TMI 4 - SUPREME COURT] where it was held that it is well-settled that an income received by the assessee can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of which appeals are filed are A.Y. 2001-02, 2002-03 and 2003-04. These funds are lying with the bank on which the interest was received. The assessee had also pledged ` 25 lacs with the Indian Overseas Bank against bank guarantee issued FDR and some interest on these FDRs were received. Another sum was kept as short term deposit for maintaining the liquidity. The question which arose for consideration before the Assessing Officer in these years is as to whether the interest income generated from the aforesaid amount is to be taxed under the head income from other sources . 3. The Assessing Officer treated the same to be the income under the aforesaid head. This order was confirmed by the CIT (A). However, the ITAT has reversed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny had awarded a Lumpsum Turnkey Contract for Engineering, Procurement, Construction and Commissioning in December 2000 by following a transparent and competitive process to the Consortium led by Ms/ Ishikawajima Harima Heavy Industries Company Ltd. (IH(), Japan; that the other members of the Consortium are M/s Ballast Nedam International BV-Netherlands, M/s Toyo engineering India Limited, M/s Ithochu Corporation, M/s Mitsui Company Limited, Japan and M/s Toyo Engineering Corporation. Ms/ IHI is one of the most reputed construction companies in the field of LNG regasification terminals; that the project implementation activities gathered momentum with the award of the EPCC contract; that the major portion of the Basic Engineering Package ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the setting up of the business, said interest will not be treated as income under the head income from other sources . 6. While coming to this conclusion the Court has specifically referred to the judgment of Supreme Court in the case of Bokaro Steel Ltd., 236 ITR 315 wherein the Court laid down the aforesaid test in the following manner:- The test, therefore, to our mind is whether the activity which is taken up for setting up of the business and the funds which are garnered are inextricably connected to the setting up of the plant. The clue is perhaps available in Section 3 of the Act which states that for newly set up business the previous year shall be the period beginning with the date of setting up of the business. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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