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2018 (11) TMI 1660 - ITAT MUMBAITaxability of interest income from short term fixed deposits - interest earned on short term fixed deposits is necessarily should be reduced from work in progress OR taxable under the head income from other sources - HELD THAT:- The law relied by the Ld. Representative of the assessee has decided this controversy by holding this fact that the interest income is in connection with the business exigency, therefore, the same is liable to be treated as business income. in the case of Infrastructure Development Company of Rajasthan Ltd. Vs. DCIT [2016 (9) TMI 957 - ITAT JAIPUR] has held that the interest income upon the deposit by the assessee for the utilization of fund for the project, is liable to be treated as business income. In the instant case, the assessee company has been incorporated for setting up of infrastructure facilities being construction of toll road between Hazaribag and Ranchi which is under construction. The assessee earned the interest income upon the borrowed funds of ₹ 46,03,457/- which was deducted from the borrowing cost to arrive at the figure of capital work in progress of ₹ 1,86,25,83,284/-. The promoters of the company had introduced money by way of share capital and also obtained credit facilities from the banks and institutions. The total funds were exclusively meant for use for setting up of the infrastructure facility. The lenders disbursed the funds at specified intervals and the said funds were required to be used for the purpose of setting up of the project. Needless to say that the on account of the time difference, the funds may lies with the bank resultantly earning the interest income in dispute. These funds were deposit in the bank for a short period for the purpose of utilizing the same in the project. Eventually, raising the interest is clearly on account of business exigency. Taking into account, all the facts and circumstances, we are of the view that the finding of the CIT(A) is not justifiable hence the same is hereby ordered to be set aside and we treat the interest income as business income of the assessee. - the appeal filed by the assessee is hereby ordered to be allowed for statistical purpose
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