Pre-amendment reassessment limitation bars late notices under the preserved regime, invalidating consequential reassessment for affected earlier asses...
Cash-sales explanations for bank deposits require documentary reconciliation; reassessment notice survived where effective response time was available...
Functional comparability in transfer pricing prevents ad hoc arm's length adjustments where functions, assets, risks and reliable comparables are unes...
Contingency expenses, exempt-income disallowance, and royalty benchmarking: unsupported adjustments were deleted under consistent accounting and trans...
The HC held that interest income earned on funds temporarily deposited in bank during pre-commencement of business for acquisition of capital asset like coal mine is inextricably linked to the cost of acquisition and cannot be charged to tax under 'income from other sources'. Such interest income is to be credited to capital work-in-progress (CWIP) and treated as part of capital cost. However, this accounting treatment applies only for assets requiring considerable time for construction or putting to use, not for off-the-shelf products. The Assessee, incorporated to acquire and operate coal mine overseas, had borrowed funds for this purpose which were temporarily kept in interest-bearing deposits pending acquisition. Since the attempt was aborted, the borrowed funds were repaid. The interest earned on such funds was rightly treated as part of capital cost creditable to CWIP. Decided in favour of the Assessee.
The HC held that interest income earned on funds temporarily deposited in bank during pre-commencement of business for acquisition of capital asset like coal mine is inextricably linked to the cost of acquisition and cannot be charged to tax under 'income from other sources'. Such interest income is to be credited to capital work-in-progress (CWIP) and treated as part of capital cost. However, this accounting treatment applies only for assets requiring considerable time for construction or putting to use, not for off-the-shelf products. The Assessee, incorporated to acquire and operate coal mine overseas, had borrowed funds for this purpose which were temporarily kept in interest-bearing deposits pending acquisition. Since the attempt was aborted, the borrowed funds were repaid. The interest earned on such funds was rightly treated as part of capital cost creditable to CWIP. Decided in favour of the Assessee.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
of 4921 
