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TMI Blog2009 (9) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... total interest earned was ₹ 29,51,512/-. The assessee had capitalized this interest income and reduced the same from the cost of the project by the assessee in the assessment year. The Assessing Officer, however, treated this interest income as revenue receipt. The CIT in appeal reversed this decision of the AO and the ITAT has upheld the decision of the CIT(A). The submission of learned counsel for the appellant is that the interest was earned from the surplus funds kept by the assessee with the bank and, therefore, it could not have been treated as capital receipt and could not have been adjusted against the project cost. Learned counsel in support of this submission, has relied upon the judgment of Hon ble Supreme Court in Bongai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eastern Minerals and Trading Agency, Kolkata or that the share capital money was already spent on purchasing capital assets for setting up of the business. On the other hand, in appeal, preferred by the assessee, the CIT(A) recorded a categorical finding that the earning of interest income on the bank deposits was linked with the setting up of its business. This was an undisputed fact which was also not questioned by the revenue. The ITAT also, in these circumstances, found that the interest income on the bank deposits was linked with the setting up of its business of the assessee company and this finding of fact of the Commissioner of Income Tax (Appeals) could not be controverted on behalf of the respondent . When we proceed with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess is of wide import which would also include all such activities which coalesce into setting up of the business. See Mazagaon Dock Ltd vs CIT and Excess Profits Tax; (1958) 34 ITR 368 (SC), and Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax; (1954) 26 ITR 765 (SC). Once it is held that the assessee s income is an income connected with business, which would be so in the present case, in view of the finding of fact by the CIT(A) that the monies which were inducted into the joint venture company by the joint venture partners were primarily infused to purchase land and to develop infrastructure-then it cannot be held that the income derived by parking the funds temporarily with Tokyo Mitsubishi Bank, will result in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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