INCOME TAX OFFICER, WARD-17(2), HYDERABAD vs. ELGEN (INDIA) PRIVATE LIMITED, HYDERABAD

ITA 244/HYD/2019Status: DisposedITAT Hyderabad30 April 2021AY 2015-1641 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the interest income earned on fixed deposits and loans by the assessee company during its pre-commencement period is to be treated as 'income from other sources' and not as a capital receipt. The issue of set-off of this interest income against business losses was restored to the Assessing Officer for fresh consideration.

What were the facts?

The assessee company, engaged in establishing power projects, had idle funds during its pre-commencement period which were invested in fixed deposits and interest-bearing loans. The company earned significant interest income from these investments.

What were the issues?

Whether interest income earned on surplus funds invested during the pre-commencement period is a capital receipt or income from other sources. Whether such interest income can be set off against business losses.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 56,Section 72

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Cases cited in this judgment(24)Show list

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD

Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU

For Appellant: Shri M. Poorna Chander Rao
For Respondent: Shri Rohit Mujumdar, Shri M. Poorna Chander Rao
Hearing: 15/03/2021Pronounced: 30/04/2021

PER L.P. SAHU, A.M.: This appeal filed by the Revenue for AY 2015-16 is directed against CIT(A) – 7, Hyderabad’s order dated 26/12/2018 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short “the Act”, on the following grounds of appeal:

1.

The order of Ld .CIT(A) is erroneous both of law and facts.

:- 2 -: Elgen (India) Pv. Ltd., Hyd.

2.

Whether, in view of facts and law, the CIT(A) is correct in law allowing the assessee to treat interest income from FDS as Capital receipt in view of the judgement of Supreme Court in the case of Tuticorin Alkali Chemicals pvt. Ld., Vs. CIT (1997] 2271 ITR 172 (SC) and Bongoigaon Refinery & Petro-chemicals Ltd Vs CIT, facts of which only are sq

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