2020 (2) TMI 1148 - HC - Income Tax

Income from other sources - interest derived by the assessee from the borrowed funds which were invested in fixed deposits with banks - HELD THAT - We admit the appeal. The following substantial questions of law are framed (i) Whether in the facts and circumstances of the case and in law the ITAT has erred in not appreciating that during the stage of pre-commencement of business interest derived by the assessee from the borrowed funds which were invested in fixed deposits with banks would be chargeable to tax under the head Income From Other Sources and would not go to reduce the capital work in progress? (ii) Whether in the facts and circumstances of the case and in law the Hon ble ITAT has erred in placing reliance on the Judgement of Delhi High Court i.e. Oil Panipat Power Consortium Ltd vs. ITO 2009 (2) TMI 32 - DELHI HIGH COURT ? (iii) Whether in the facts and circumstances of the case and in law the Hon ble ITAT has erred by not applying the case of Tuticorin Alkali Chemicals Fertilisers Ltd. Vs. CIT 1997 (7) TMI 4 - SUPREME COURT ?

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Interpretation of legal precedents and their application in the case.
3. Framing of substantial questions of law for consideration.

Condonation of Delay:
The appellant sought condonation of a two-day delay in re-filing the appeal. The court allowed the application, considering the short delay and condoned the delay. The application was disposed of promptly.

Interpretation of Legal Precedents:
The appellant argued that the Tribunal relied on a decision of the Delhi High Court in a previous case, which might require reconsideration in light of Supreme Court judgments. The Supreme Court cases cited were Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CIT and Commissioner of Income Tax Bihar-II Patna Vs. Bokaro Steel Limited. On the other hand, the respondent relied on Commissioner of Income-Tax Vs. Sasan Power Ltd. The court found that these decisions needed consideration and admitted the appeal. Substantial questions of law were framed regarding the taxability of interest derived from borrowed funds invested in fixed deposits, the reliance on the previous Delhi High Court judgment, and the application of relevant case law.

Framing of Substantial Questions of Law:
The court framed three substantial questions of law for consideration in the appeal. These questions pertained to the taxability of interest from borrowed funds invested in fixed deposits, the reliance on the Delhi High Court judgment, and the application of the Tuticorin Alkali Chemicals & Fertilisers Ltd. case. The court directed the case to be listed for further proceedings based on these substantial questions of law.

This summary provides a detailed analysis of the judgment, covering the issues of delay condonation, interpretation of legal precedents, and the framing of substantial questions of law for consideration in the appeal.