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2013 (9) TMI 533 - AT - Income TaxInterest earned on the parking of share capital to be chargeable under the head ‘Income from other sources’ or to be capitalized – Interest payable on borrowing of such money to be disallowed u/s 14A of the Income Tax Act – Held that:- Interest cannot be taxed as income from other sources in the hands of the assessee and therefore, the subsequent disallowance of expenses claimed at 10% to earn that income has been infused in the total project cost cannot be disallowed insofar as the whole of the income has been capitalized was rightly considered for revision by the assessee before the Assessing Officer – Decided in favor of Assessee. Meaning to the insertion of the proviso to Section 36(1)(iii) - Held that:- Interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession was being allowed as deduction u/.s.36(1)(iii) of the Act as revenue expenditure was amended w.e.f. 1.4.2004 when the amount of interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession whether capitalized in the books of account or not for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction, holds true for the income insofar as once having identified that the income from interest is from the Banks where the share capital was parked was to not earn interest to be balanced interest on capital borrowed.
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