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2013 (4) TMI 265 - ITAT DELHIInterest on FDRs - Addition under the head income from "other sources" by treating it pre- operative income earned - CIT(A) deleted the addition - Held that:- The decision of CIT Vs. Jaypee DSC Ventures Ltd. [2011 (3) TMI 309 - DELHI HIGH COURT] wherein held that case is not one where the assessee had made the deposit of surplus money lying idle with it in order to earn interest, on the contrary, the amount of interest was earned from fixed deposit which was kept in the bank for furnishing the bank guarantee. It had an inextricable nexus with securing the contract. The view expressed by the Tribunal cannot be found fault with by holding that the interest earned by the assessee on the FDRs has intrinsic and inseggregable nexus with the work undertaken and, therefore, the interest earned by the assessee is capital in nature and shall go towards adjustment against the project expenditure and the same cannot be assessed as income from other sources. The above case is squarely applicable to the facts of the assessee's case as it is not a case where any surplus share capital money which was lying idle had been deposited in the bank for the purpose of earning interest. The deposit of money in present case was directly linked with the business activity of the company. The same is intricately connected with the business activity of the company. The interest was a capital receipt, which would got reduce the cost of asset. Hence interest earned should not form part of profit & loss account and accordingly cannot be taxed as income - in favour of assessee.
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