Sangam Power Generation Company Ltd Vs ITO 6(1)
Parties Involved
Facts Summary
The Sangam Power Generation Company Ltd (SPGCL) is an unlisted public company and a wholly owned subsidiary of Jai Prakash Power Ventures Ltd. It was incorporated to construct a thermal power project in Uttar Pradesh. The project was delayed, and the company earned interest income on Term Deposit Receipts (TDR) during the assessment years 2013-14 and 2014-15. The company treated the interest income as a capital receipt and reduced it from pre-operative expenses. The Income Tax Officer assessed the interest income under 'Income from Other Sources'. The company appealed against the first appellate authority's order, arguing that the interest income should be treated as a capital receipt.…
Decision in favour of
Assessee
Legal Issues
- 1. Whether the character of interest on Term Deposit Receipt would change to capital if such Term Deposit Receipt are placed as security for issuance of bank guarantee to be offered to third party/customers in obtaining business contract which in turn generate business income?
Judgment Outcome
Decided in favour of Assessee.
Precedents Relied Upon
2 precedents cited in this judgement.