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2024 (6) TMI 1059 - AT - Income TaxIssues: The judgment involves appeals by the Department against separate orders passed by the Ld.Commissioner of Income-tax (Appeals)-12, Ahmedabad for Assessment Years 2016-17 & 2017-18, concerning the treatment of interest income. Issue 1 - Treatment of Interest Income for AY 2016-17: The Department contested the Ld.CIT(A)'s grant of relief to the assessee on account of interest income, arguing that the interest income on FDs should be considered taxable income under the head 'Income from other sources.' The Ld.AR referenced a previous decision by the ITAT Ahmedabad Bench in favor of the assessee, where interest income earned on Fixed Deposits related to the prior period of the business commencement was treated as a capital receipt. The Tribunal upheld the Ld.CIT(A)'s decision, stating that the interest income earned before the commencement of business was indeed a capital receipt and should be adjusted against pre-operative expenses. Issue 2 - Treatment of Interest Income for AY 2017-18: The appeal for AY 2017-18 mirrored the issue in AY 2016-17. The Tribunal dismissed the Revenue's claim to treat interest income as 'income from other sources,' aligning with the decision made for AY 2016-17. The interest income was deemed a capital receipt to be set off against pre-operative expenses. Therefore, the Revenue's appeal for AY 2017-18 was also dismissed. In conclusion, both appeals by the Revenue were dismissed based on the Tribunal's findings regarding the treatment of interest income as a capital receipt to be adjusted against pre-operative expenses. The judgment was pronounced in the Open Court on 20th June 2024 at Ahmedabad.
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