Taxability of Interest earned on Share capital put in form of FDRs for procurement of capital goods

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.

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