Bharat Oman Refineries Ltd. v. DCIT

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The Tax Publishers2013 TaxPub(DT) 1326 (Ind-Trib) : (2013) 052 (II) ITCL 0062 : (2013) 154 TTJ 0211 : (2013) 085 DTR 0113 Income Tax Act, 1961 --Head of income --Business income or income from other sources Pre-commencement interest income on FDR's -- Assessing officer, during the assessment proceedings, noted that in computation of total income of assessee, a certain amount was offered, and claimed deduction, of certain sum being interest earned on FDRs prior to commencement of business from debenture loans thus he asked the justification of such deduction. Assessee while placing reliance in the case of CIT v. VGR Foundations 2008 TaxPub(DT) 0743 (Mad-HC) : (2008) 298 ITR 132 (Mad.) claimed that the deduction was rightly claimed. Assessing officer however held that earning of such interest was to be taxed as income from other sources. *Held:* Was justified, as the assessee earned the interest from fixed deposits and such deposit or earning of interest was plainly not in the ordinary course of its business. The bare fact that assessee deposited money in the bank was itself not sufficient to show that the deposit was made with a view to carrying out the business in the sense of earning profit by investment, therefore, such interest income, earned by assessee, was not the business income of assessee but was assessable as income from other sources. Moreso, the assessee-company could not claim any relief either under section 70 or section 71 since its business had not started and there could not be any computation of business income or loss incurred by assessee for the purposes of setting up its business could not be allowed as deduction nor could it be adjusted against any other income. Income Tax Act, 1961, Section 14 Income Tax Act, 1961, Section 28(i), 56, 70 and Income Tax Act, 1961, Section 71 IN THE ITAT, Indore Bench JogindeR Singh, J.M. & R.C. Sharma, A.M. Bharat Oman Refineries Ltd. v. Dy. CIT ITA No. 2/Ind/2012 A.Y. 2008-09 30 July, 2012 Income-tax Act, 1961, ss. 28(i), 56, 70 & 71; In favour of: Revenue Appellant by : Arun Mehrotra Respondent by : Keshav Saxena ORDER *Joginder Singh, J.M.* The assessee is aggrieved by the impugned order dated 3-10-2011 passed by the learned first appellate authority, Bhopal, on the ground that on the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in confirming the addition of Rs. 31,39,70,137 to the total income on account of interest earned on FDRs made out of zero coupon convertible bonds and further erred in not placing reliance on the decision of Honble Madras High Court in the case of CIT v. VGR Foundations 2008 TaxPub(DT) 743 (Mad-HC) : (2008) 298 ITR 132 (Mad). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1326 (Ind-Trib) : (2013) 052 (II) ITCL 0062 : (2013) 154 TTJ 0211 : (2013) 085 DTR 0113

Income Tax Act, 1961

--Head of income --Business income or income from other sources Pre-commencement interest income on FDR's -- Assessing officer, during the assessment proceedings, noted that in computation of total income of assessee, a certain amount was offered, and claimed deduction, of certain sum being interest earned on FDRs prior to commencement of business from debenture loans thus he asked the justification of such deduction. Assessee while placing reliance in the case of CIT v. VGR Foundations 2008 TaxPub(DT) 0743 (Mad-HC) : (2008) 298 ITR 132 (Mad.) claimed that the deduction was rightly claimed. Assessing officer however held that earning of such interest was to be taxed as income from other sources. Held: Was justified, as the assessee earned the interest from fixed deposits and such deposit or earning of interest was plainly not in the ordinary course of its business. The bare fact that assessee deposited money in the bank was itself not sufficient to show that the deposit was made with a view to carrying out the business in the sense of earning profit by investment, therefore, such interest income, earned by assessee, was not the business income of assessee but was assessable as income from other sources. Moreso, the assessee-company could not claim any relief either under section 70 or section 71 since its business had not started and there could not be any computation of business income or loss incurred by assessee for the purposes of setting up its business could not be allowed as deduction nor could it be adjusted against any other income.

Income Tax Act, 1961, Section 14

Income Tax Act, 1961, Section 28(i), 56, 70 and

Income Tax Act, 1961, Section 71

IN THE ITAT, Indore Bench

JogindeR Singh, J.M. & R.C. Sharma, A.M.

Bharat Oman Refineries Ltd. v. Dy. CIT

ITA No. 2/Ind/2012

A.Y. 2008-09

30 July, 2012

Income-tax Act, 1961, ss. 28(i), 56, 70 & 71; In favour of: Revenue

Appellant by : Arun Mehrotra

Respondent by : Keshav Saxena

ORDER

Joginder Singh, J.M.

The assessee is aggrieved by the impugned order dated 3-10-2011 passed by the learned first appellate authority, Bhopal, on the ground that on the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in confirming the addition of Rs. 31,39,70,137 to the total income on account of interest earned on FDRs made out of zero coupon convertible bonds and further erred in not placing reliance on the decision of Honble Madras High Court in the case of CIT v. VGR Foundations 2008 TaxPub(DT) 743 (Mad-HC) : (2008) 298 ITR 132 (Mad).