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2016 (8) TMI 1227 - ITAT CHANDIGARHPenalty u/s 271(1)(c) - addition made on account of interest income earned on deposits made from funds available during preoperative period of the assessee - Held that:- Undisputedly, the funds in the present case were given for setting up projects and on account of delay in starting the projects, the funds were invested in short term deposits. The assessee was of the belief that the funds were inextricably linked to the setting up of business of the assessee and therefore the interest earned thereon was a capital receipt. The claim of the assessee was denied for the reason that since no business had commenced the income could not be said to be linked to the business of the assessee and further that there was no restriction on the usage of interest earned for the purpose of setting up of projects only, therefore, the interest earned could not be said to be capital in nature. We find that the Delhi High Court in the case of Indian Oil Panipat (2009 (2) TMI 32 - DELHI HIGH COURT ),while holding preoperative period interest earned to be capital in nature, had distinguished the apex court decision in Tuticorin Alkali (1997 (7) TMI 4 - SUPREME Court) stating that that the nature of the funds whether surplus or specific purpose, was the determinative factor of the nature of interest earned thereon and went on to distinguish the apex court decision by stating that the funds in that case were surplus funds and therefore interest earned thereon was held to be revenue in nature. The issue therefore is a debatable issue and in such circumstances the claim of the assessee cannot be said to be wholly untenable. The assessee cannot therefore be held guilty of furnishing inaccurate particulars of income even as per the decision of the Delhi High Court in the case of Zoom Communication Private Limited (2010 (5) TMI 34 - DELHI HIGH COURT), as argued by the Ld.DR, since in that case the assessee was held liable to penalty, as its claim was found to be wholly untenable in law. - Decided in favour of assessee.
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