2024 (4) TMI 923

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....are as under: "1) On the facts and in the circumstance of the case and in law, the Ld.CIT(A) has erred in allowing the claim of interest income of Rs. 3,40,38,900/- holding that the same are as capital receipts and ignoring the fact that interest income of FDs is assessable under the head 'income from other sources' as held by the Hon'ble Supreme Court in the case of CIT Vs. Autokast Ltd. [2001] 116 Taxman 244 (SC) and despite the fact that the assessee itself declared the interest income as taxable income in the return of income. 2) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in following the order of the ITAT without considering the fact that the assessee has not show any nexus b....

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....l before the Ld.CIT(A). The Ld. CIT(A) partly allowed the appeal of the assessee. 5. The Ld.DR submitted that the assessee-company had itself shown the interest income of Rs. 3,40,38,900/- on FDs as taxable in its return of income. Under the circumstances, it was not proper for the Ld.CIT(A) to hold that the said "interest income" was in the nature of "capital receipt". 6. The Ld.AR submitted that an identical issue was involved in assessee's own case for AYs 2013-14 & 2014-15 and the Ld. ITAT Ahmedabad Bench "B" had held in ITA Nos.1642 & 1643/Ahd/2018 vide order dated 06/03/2020 that the interest income earned on Fixed Deposits pertaining to prior period commencement of business of the assessee should be treated as "capital receipt"....

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....sessing Officer has given a categorical finding, in this regard, in the assessment order itself. Thus, the interest earned on FDs during the year was prior to commencement of business of the assessee-company and was in the nature of "capital receipt" as held in the assessee's own case in the AYs 2013-14 & 2014-15. The objection of the Department is that the assessee had not shown any nexus between the funds borrowed and the specific investment made by it, is not found relevant as such nexus has to be examined in the year in which the investments were made for the first time. In the present case, the investments were made in the earlier years that is continuing in the current year and the assessee-company is deriving interest income on the F....