INCOME TAX ACT, 1961

Section 56

Income from other sources - Taxability - Revenue earned during trial run of plant - Assessee netted off expenditure during trial run against income of trial sum

In assessee's case during the relevant year a new plant, namely, LPG plant at Pata was commissioned. Trial runs in relation to above plant, commenced in Novermber, 1999 and were concluded with the commissioning of above project or commercial production in March, 2000. During trial run, assessee earned revenue and also incurred certain expenditure which was revenue in nature. The excess of expenditure over income was transferred to capital work-in-progress. However, AO treated revenue earned by assessee as income from other sources. Held: Assessee had rightly netted off expenditure during trial run against the income of trial run and balance was rightly transferred to capital work-in-progress. Accordingly, AO was directed to delete revenue from the head 'Income from other sources'.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2000-01 to 2002-03

INCOME TAX ACT, 1961

Section 37(1)

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