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2010 (12) TMI 1183 - ITAT HYDERABADInterest received from fixed deposits (FD) - chargeable to tax - under the head 'Income from other sources - the assessee is in the process of setting up of multi product SEZ project. For the purpose of setting up of the project the assessee borrowed ₹ 289 crores from banks. A part of the amount which was not required immediately was invested in FD with bank. Assessee claimed that that the interest paid on the borrowed funds has to be set off from the interest received on the FD. HELD THAT:- In Case of Tuticorin Alkali Chemicals an Fertilizers Ltd.[1997 (7) TMI 4 - SUPREME COURT] held that In view of section 57(iii), interest paid on OD obtained for the purpose of business could not be deducted from the interest earned on monies kept in FD as such income derived by way of interest on FD was to be taxed under the head 'Income from other sources'. We, however, make it clear that though the assessee may not be entitled to have interest paid by it on OD to the bank, deducted from the interest received by it on the short-term FD, the assessee is entitled to deduction of the same from its business income. Therefore, we do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. In the result, the appeal of the assessee stands dismissed.
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