The Supreme Court of India, in the case of the challenge of the nature of Interest income earned by Bangalore Metro Rail Corporation, issued notice for further hearing. Mr Balbir Singh, the counsel appeared for the petitioners along with Mrs Gargi Khanna and Mr Senthil Jagadeesan appeared for the respondent-assessee.
The senior counsel submitted that the question to be examined here is whether the High Court is correct in holding that based on the State Government’s order dated 25.03.2008, interest income earned by Bangalore Metro Rail Corporation (assessee) cannot be treated as their income and whether the order of the State Government cannot preclude the assessee from the ambit of the income tax. Furthermore, whether the assessee company is a distinct legal entity and its earned income ought to be accounted in their Books of Accounts and assessed to taxation, as per the provisions of the Income Tax Act, 1961.
On the other hand, the counsel for the respondent-assessee would rely on the decision in CIT vs. Karnataka Urban Infrastructure Development and Finance Corporation [(2009) and CIT vs. Karnataka State Agricultural Produce Processing and Export Corporation Ltd. [(2015) to submit that since profit motive was absent for the assessee, and they simply fruitfully utilized income instead of keeping it idle, the income earned will be revenue in nature and not accretion to capital. So the assessee should not be subjected to taxation. The two-judge bench comprising Justice Hrishikesh Roy and Justice Sanjay Karol issued notice for further hearing.
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