Interest on FD made out of Share Capital under constraint is Capital Receipt

Elgen (India) Pvt. Ltd. Vs. ITO (ITAT Hyderabad) In case the share capital is brought for specific purpose for the implementation of the particular project, and interest is earned by temporarily depositing in the bank, such income can be treated as capital receipt. In the given case, assessee has brought the share capital only for the implementation/ commencement of the power project. Since, it could not proceed with the implementation, under constraint, it kept the unutilized funds in the bank; in that process it has earned interest; By following the ratios of Hon’ble Supreme Court, the fun...