By K. B. Bhujle, Advocate
4 ClT vs. Bangalore Metro Rail Corporation Ltd.
[2022] 441 ITR 113 (Kar)
A.Ys: 2007-08 and 2008-09;
Date of order: 23rd November, 2021
S. 4 of ITA, 1961
Income — Income or capital — Investment of funds before commencement of operation in fixed deposits and mutual funds as per directive of Government — Income generated to be utilised for purposes of business of company — Income not revenue receiptThe assessee was a company incorporated under the Companies Act, 1956 and was a wholly-owned undertaking of the Government of Karnataka. It was established with the approval of Government of India to implement a rail-based mass rapid transit system in five years in five stages. The project’s cost was to be financed by both the Union and the State Governments. The assessee had received funds during the A.Y. 2007-08 which were not immediately required for execution of the project and these were invested in fixed deposits and mutual funds. As a result, interest and dividends were received. The assessee contended that the dividend income on mutual funds received from State Bank of India and Unit Trust of India was exempt u/s 10(35) of the Income-tax Act, 1961. Apart from this, the assessee also claimed a short-term loss of Rs. 5,02,05,005 arising out of redemption of units with a mutual fund. The Assessing Officer rejecting the contention of the assessee and brought the income of Rs. 10,30,48,755 that was earned by the comp
