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2022 (11) TMI 588 - ITAT DELHIInterest earned on FD - Income from other sources - HELD THAT:- It is an undisputed fact that all the FDRs were purchased by the assessee for letter of credits and bank guarantees given to various suppliers of goods from abroad. The details have been furnished before the lower authorities, which have been examined and no adverse inference has been drawn in so far as details for issue of letters of credit/bank guarantee in favour of the supplier is concerned. It is also not in dispute that the assessee has reduced interest accrued on FDRs from the Project and Pre-operative Expenses’ reflected in the balance sheet. Entire transaction has been duly explained by way of Notes to the respective Schedule to the Balance Sheet by the assessee and the auditors. We are of the considered view that the assessee has filed complete details of FDs and has also provided details of LC/BG against which FD was taken and it can be safely concluded that the interest earned on FD is inextricably linked to the setting up the hotel as such and, therefore, the findings of the ld. CIT(A) in treating interest as income from other sources is not only erroneous but against the facts of the case in hand as explained hereinabove. We direct the Assessing Officer to consider the interest as part of capital receipt to be deducted from the cost of project. Disallowance being 1/5 of preliminary expenses u/s 35D - HELD THAT:- It is true that the said claim was made during the assessment proceedings for Assessment Year 2007-08 wherein the Assessing Officer denied the claim of expenses but the CIT(A) allowed 1/5th of the expenses u/s 35D of the Act. It is equally true that once the claim has been allowed in the initial assessment year, the said claim cannot be denied in the subsequent assessment years on identical set of facts. We find that the expenditure was incurred by the assessee towards fees paid to the Registrar of Companies and the said expenditure was incurred in Assessment Year 2007-08 and since it has been considered as preliminary expenses in the said assessment year and since 1/5th of the same has been allowed u/s 35D of the Act, balance has to be allowed in the subsequent four assessment years following the ratio of SHASUN CHEMICALS AND DRUGS LTD. [2016 (9) TMI 1199 - SUPREME COURT] We accordingly direct the assessing officer to allow the said claim. Ground No. 3 with sub grounds is allowed.
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