It might be caused by how the date ranges are handled. The union might allow to get a more straight forward plan.

Maybe if you combine the solutions, you could get better performance.

SELECT

t.Id,

x.Amount,

t.CashFlowDate,

x.AmtType

FROM #Test t

CROSS APPLY (

VALUES

(t.Principal, 'Principal'), --No need for additional date condition

(CASE WHEN t.CashFlowDate >= '2016-01-02' THEN t.Interest END, 'Interest') --Exclude the first day

) x (Amount,AmtType)

WHERE x.Amount > 0

AND CashFlowDate between '2016-01-01' AND '2016-01-05'; --Leave a single date condition