Case Law Details
Solarfield Energy Pvt Ltd Vs ITO (ITAT Mumbai)
Conclusion: Interest income generated during pre-operative period was correctly reduced by assessee-company from WIP as the same was inextricably linked with the power project and would be considered as capital receipt.
Held: During the assessment, AO noted that assessee had reduced interest on fixed deposits from WIP. AO made addition of the same. Assessee filed its detailed reply and stated that the amount was earned during the testing period and was not taxable as income and had been correctly reduced from WIP. It was held if the funds were invested temporarily in the fixed deposit for the purpose of setting-up of the power project, the interest earned was inextricably linked with the power project, interest would be considered as capital receipt and had to be set-off against pre-operatives expenditure which would reduce the cost of WIP.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals by the assessee are directed against the order of Commissioner of Income-tax (Appeals)-6, Mumbai dated 15-06-2016 & 31.05.2016 pertaining to AY 2012-13. Appeal in ITA No. 5189/Mum/2016 relates to assessment order passed under section 143(3)dated 26.03.2015, however, ITA No. 5190/Mum/2016 arising against the order passed on the rectification application filed under section 154 of the Act. In both the appeals the assessee has raised common grounds of appeals, therefore, both the appeals are heard and are decided by common order. The grounds of appeal taken by the assessee in ITA No 5189/Mum/2015 read as follows:-
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