The Tax Publishers2020 TaxPub(DT) 4566 (Ctk-Trib)

INCOME TAX ACT, 1961

Section 4

Where assessee did not offer interest on FDR and Flexi deposit, to tax claiming the same to be capital receipt and AO taxed the same as income from other sources, matter was referred back to AO to examine assessee's claim that interest was inextricably linked to construction project

Income - Capital or revenue receipt - Interest on FDR and Flexi deposit - Assessee pleading interest income to be inextricably related to capital project--Surplus interest income after reduction of expenses transferred to reserves

Assessee-company earned interest on FDR and Flexi deposit and did not offer the same to tax. AO taxed the same as income from other sources. Assessees case was that interest was inextricably linked to construction project and was purely a capital receipt.Held: Assessee dedducted certain expenses from interest on FDR and Flexi deposit and remaining surplus had been transferred into reserve and surplus account. AO was directed to examine as to whether income which had been transferred into reserve and surplus account was utilized, either for revenue purpose or for capital expenditure and to decide the issue accordingly.

REFERRED : Haridaspur Paradip Railway Company Limited v. Dy. CIT (ITA No.383/CTK/2019, Order, dated 12-10-2020).

FAVOUR : Matter remanded.

A.Y. : 2013-14 & 2014-15



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