Case Law Details
Bangalore Metro Rail Corporation Ltd. Vs DCIT (ITAT Bangalore)
Facts- The assessee is a wholly owned company of Government established for the implementation of rail based mass rapid transit system which was called as “Bangalore Metro Rail Project” in five years in five stages.
During the previous year relevant to AY 2009-10, the funds received by the assessee which were not immediately required for execution of the project were invested in Fixed Deposit and Mutual Funds. The assessee claimed the said income as exempt. However, submissions made by the assessee for claiming the same as exempt income was not accepted by AO.
Conclusion- The Hon’ble Karnataka High Court in assessee’ s own case for Assessment Years 2007-08 and 2008-09 held that identical interest income is not taxable for the following reasons –
It is clear that the income generated out of earlier release of State Government for its project would have to be converted into State’s equity towards the project and the same cannot be counted as income of BMRCL. Thus, there is no profit motive as the entire fund entrusted and the interest accrued therefrom has to be utilized only for the purpose of scheme. Thus, it has to be capitalized and cannot be considered as revenue receipts.
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