Case Law Details
Jaypee Powergrid Limited Vs ITO (ITAT Delhi)
It is clear upon a perusal of the facts as found by the authorities below that the funds in the form of share capital were infused for the specific purpose of acquiring land and the development of infrastructure. Therefore, the interest earned on funds primarily brought for infusion in the business could not have been classified as income from other sources. Since the income was earned in a period prior to commencement of business, it was in the nature of capital receipt and hence was required to be set off against the pre-operative expenses.” That, the ratio of the above finding of the Hon’ble Delhi High Court would be squarely applicable to the facts of the assessee’s case, because admittedly in the case under appeal before us the share capital as well as loans were raised for the specific purpose of setting up of the power generation plants. The business of the assessee has not been commenced and therefore, as per above decision, the interest received in the period prior to commencement of business was in the nature of capital receipt and hence was required to be set off against the pre-operative expenses.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-5, Delhi, Dated 14.12.2015, for the A.Y. 2011-2012, challenging the Orders of the authorities below in assessing a sum of Rs.1,53,70,579/- being interest income from FDRs during pre-operative period as income from other sources.
2. We have heard the Learned Representatives of both the parties through video conferencing and perused the Orders of the authorities below.
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