Project-linked interest on mobilisation advance treated as business income where it had an intrinsic nexus with setting up operations.

Interest derived from mobilisation advance paid to contractors for execution of a new project was treated as business income because it had an intrinsic nexus with the setting up of the project. Applying the principle in Bokaro Steel, the lower authorities held that the receipt was not "other income" but part of the business process. The Delhi HC noted that it had earlier taken the same view on similar income of the assessee and saw no reason to differ from the concurrent finding. The interest was therefore rightly assessed as business income, and no substantial question of law arose.

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Issues: Whether interest derived from mobilisation advance paid to contractors for execution of a new project was to be treated as business income or as other income.

Analysis: The lower authorities applied the Supreme Court ruling in Bokaro Steel and treated the interest as having an intrinsic nexus with the setting up of the project. The Court noted that it had also earlier held similar income of the same assessee to be business income, and therefore found no reason to differ from the concurrent view.

Conclusion: The interest was rightly treated as business income and no substantial question of law arose.

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