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2012 (8) TMI 488 - AT - Income TaxInterest on borrowed funds - proportionate dis-allowance attributing the same towards Capital Work In Progress - Held that:- There is opening WIP of Rs. 3.16 crores in relation to which no disallowance of interest had been made in the preceding year which means that capital WIP to that extent had been accepted by the department as explained from own funds. Therefore no disallowance of interest can be made in relation to the opening WIP. The addition during the year is only Rs. 66.50 lakh. The capital and reserve of the assessee had increased during the year of Rs.10 crores and increase in loans during the year was only of Rs. 3 crore. Moreover, the assessee during the year had earned profit of Rs. 14 crores. Therefore, capital addition during the year is easily explained out of own funds. Dis-allowance deleted Depreciation on UPS - Revenue contending 15% whereas assessee contended 15% - Held that:- Depreciation @ 60% has to be allowed in case of UPS. See CIT vs BSES Rajdhani Powers Limited (2010 (8) TMI 58 - DELHI HIGH COURT) Interest income received from fixed deposits kept as margin money for LCs / Bank Guarantee and also as security deposit with Maharashtra State Electricity Board (MSEB) - Business Income or Income from other sources - Held that:- Interest income has to be considered as incidental business income. See CIT Vs Indo Swiss Jewels Limited And Another (2005 (9) TMI 47 - BOMBAY HIGH COURT) - Decided in favor of assessee
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