INCOME TAX ACT, 1961

Section 14

Head of income - Income from other sources or Business income - Interest income earned from fixed deposits made in pre-operative period -

The assessee, which was a company engaged in the business of developing and maintenance of commercial complex, filed its return of income. The AO completed the assessment under section 143(3) of the Act arriving the income at Rs. 65,75,730 after bringing to tax the interest income of Rs. 62,77,671 under the head 'Income from Other Sources'. The assessee filed an appeal before the CIT (A). In the grounds of appeal filed before the CIT(A), the assessee contended that the AO ought to have seen that the fixed deposits were made in the pre-operative period and hence, the same were to be considered as part of the project cost The CIT(A), after considering the factual position as submitted by the assessee that the interest amount earned from the fixed deposits was in the nature of pre-operative periods, examined the case and held that the stand taken by the assessee could not be accepted. Held: The issue involved has been settled by the Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd.. The AO, the CIT(A) and the Tribunal applied two decisions of the Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. and in the case of CIT v. Bokaro Steels Ltd. 1999 TaxPub(DT) 1094 (SC) : (1999) 236 ITR 315 (SC)

Relied:CIT v. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) : 1999 TaxPub(DT) 1094 (SC), Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT (1997) 227 ITR 172 (SC) : 1997 TaxPub(DT) 1304 (SC)Distinguished on facts:Daimler India Commercial Vehicles (P) Ltd. v. Dy. CIT (2019) 416 ITR 343 (Mad) : 2019 TaxPub(DT) 4806 (Mad-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

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