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2019 (8) TMI 835 - ITAT DELHITP adjustment - interest on fixed deposits in bank as income from other sources - AO in the instant case, held that the assessee is developing a property for its use in the business of letting them on hire and is not developing the property for future sale - construction of mall - HELD THAT:- So far as the disallowance of various other expenses debited to the Profit & Loss Account is concerned, the DRP held that except marketing research expenditure which is directly related to the project, the other expenses are allowable as business expenditure. The DRP also did not allow the claim of interest on overdraft as business expenditure. It is the submission of the ld. counsel for the assessee that when the A.O./DRP have already held that the assessee has set up its business, therefore, there was no need for having this divergent treatment of the income and expenses. As relying on INDIAN OIL PANIPAT POWER CONSORTIUM LIMITED, NEW DELHI VERSUS ITO [2009 (2) TMI 32 - DELHI HIGH COURT], we hold that the funds raised by the assessee are inextricably linked with setting up of its mall at Bangalore and, therefore, the interest earned by the assessee by parking the said funds temporarily with bank cannot be treated as ‘Income from other sources.’ Since the income was earned in a period prior to commencement of business, it was in the nature of capital receipt and, therefore, it would go to reduce the capital work-in-progress. We, therefore, accept the above contention of the ld. counsel for the assessee that if the expenditure is capitalized, the income earned on temporary parking of the funds being capital in nature will go to reduce the capital work-in-progress. Allowability of market research expenses and depreciation on leasehold improvements as business expenditure - HELD THAT:- Since, in the preceding paragraphs, we have already held that the interest income should go to reduce the capital work-in-progress where all the expenses are capitalized, therefore, following similar reasoning we hold that the assessee should not have any grievance in treating this expenditure as work-in-progress since it is getting the benefit of reduction to the extent of the interest income. Ground of appeal therefore, dismissed. Claim of expenses on account of interest on overdraft facility - the same also, in our opinion, has to be capitalized and the assessee will get only the benefit of set off to the extent of interest income. - the appeal filed by the assessee is partly allowed
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