Pre-commencement Interest on advances to contractors is capital receipt

I.T.O Vs. M/s Kolkata Metro Rail Corpn. Ltd. (ITAT Kolkata) It is well-settled that an income received by the assessee can be taxed under the head “Income from other sources” only if it does not fall under any other head of income as provided in section 14 of the Act. The head “Income from other sources” is a residuary head of income. 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 pre- operative expenses. In the case of Tuticorin Alkali Chemicals [1997] 227 IT...