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2017 (11) TMI 849 - ITAT MUMBAINature and taxability of interest earned on Fixed Deposits with banks - Held that:- In the instant case it has to be deduced that interest on FCCB funds temporarily placed in fixed deposits awaiting deployment in the construction of new projects is a capital receipt, since the FCCB proceeds are “inextricably linked” with the construction of new projects, as the same have been raised for that purpose alone. Thus it has to be held that the interest earned by the assessee by temporarily parking the FCCB funds in banks, pending its full deployment in the ongoing construction of hotel projects, was in the nature of capital receipt and was thus, required to be set-off against the cost of capital work-in-progress. Thus, assessee succeeds on this aspect. Disallowance under section 14A of the Act - Held that:- On this aspect, without going into much detail, it is directed that the disallowance be limited to the extent of exempt income in terms of the ratio of the ratio of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, (2015 (9) TMI 238 - DELHI HIGH COURT) .
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