Brief of the case:
AO made addition on account of interest earned on FDRs put in bank for procurement of capital asset by holding that no such capital assets is acquired by assessee during the year under consideration. CIT (A) granted relief to the assessee. On further appeal to ITAT by revenue appeal was dismissed and it was held that amount was invested by joint venture partner by raising share capital and funds were directly linked with setting up of project.
Facts of the case:
- The assessee company was incorporated on 24.08.2005 to carry on in India or elsewhere the business to generate, receive, produce, improve, buy, sell, etc. in electric power by establishing thermal power plant, active power plants etc.
- During the year under consideration, no business activities were carried out by the assessee as the project was under implementation. The case of the assessee was selected for scrutiny.
- During assessment proceedings, the AO observed that assessee had received an amount of Rs.70,75,843/- from State Bank of Mysore as interest on fixed deposits but the same was not declared in the return of income as income from other sources.
- On further perusal of details, the AO observed that the assessee had reduced such interest from capital w.i.p. (capital work in progress), therefore, the assessee was asked to provide an explanation as to why interest income of Rs.70,75,813/- be not treated as income from other sources.
- The AO after relying upon the case law of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs CIT 227 ITR 172, made the addition of R.70,75,843/- as income from other sources.
Contention of the revenue:
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
