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TMI Blog2015 (5) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as income from other sources. The reasoning in Indian Oil (supra) is in line with Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court ). Similarly, the Supreme Court held that such receipts are not income in CIT v. Karnataka Power Corporation, (2000 (7) TMI 72 - SUPREME Court) and Bongaigaon v. Refinery and Petro Chemical Co. Ltd. v. Commissioner Income Tax [2001 (7) TMI 4 - SUPREME Court ]. This Court is consequently of the opinion that the Revenue’s contentions have to perforce, fail. Furthermore, the mandate of Section 117C of the Companies Act also supports this view, because a debenture debtor such as the assessee in this case, is compelled to a certain margin separately, to secure the interest of the debenture holders. - Decided aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT was justified in the eyes of the law in treating the interest income of ₹ 77,25,153/- on the FDR's as part of its business income? (ii) Whether the ITAT was in error in allowing the business expenditure of ₹ 1,40,575/- as revenue expenditure? 2. The assessee company engages in business as builders and the developer. During the relevant period in the assessment year, it earned interest to the extent of ₹ 77,25,153/- on FDRs which was not offered for taxation; instead it was set-off with projects in progress. Holding that interest income was unrelated to the business activity of the assesse the A.O. treated this income to be income from other sources. The A.O. further disallowed the setting-off of this income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant on the bank FDRs after the commencement of the appellant's business. The said investment in bank FDRs was not out of surplus funds but for creating a Minimum Interest Reserve Account to service the interest burden on the above debenture as per the terms of the above Debenture Trust Deed. In view of the above, the facts in the instant case are clearly distinguishable. Considering the same, I find that the action of the AP in treating the impugned amount of ₹ 77,25, 153/- as income from other sources is not sustainable on facts or in law. The ITAT upheld the CIT(A) s decision. On this issue, the Revenue urged that both the lower authorities fell into error in not upholding its contentions, reflected in the AO s order, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up the steel plant of the assessee. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. 4. This Court, in Indian Oil Panipat Power Consortium Ltd v. ITO (2009) 315 ITR 255 (Del) held that where interest on money is received as share capital, and is temporarily placed in fixed deposit awaiting acquisition of land, a claim that such interest is in a capital receipt entitled to be set off against pre-operative expenses, is admissible, as the funds received by the assessee company by the joint venture partners are inextricably linked with the setting up of the plant and such interest ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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