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2015 (5) TMI 1226 - AT - Income TaxTaxability of interest under the head Income from other sources - Commissioner of Income Tax (Appeals) justification in holding that the interest accured / received was the Income of the assessee appellant - HELD THAT:- We find that during this year assessee has borrowed certain funds as mentioned in the submissions before AO from PFC and ADB. Assessee had earlier taken the money from Delhi Jal Board on which no interest was required to be paid. It was held in the earlier year in assessee’s own case that interest on such investment of these funds would be taxable. In view of the decision of Hon’ble Supreme Court in case of Tuticorin Alkali Chemicals And Fertilizers Ltd. Vs. CIT[1997 (7) TMI 4 - SUPREME COURT]. However, the interest earned on temporary investment made out of the borrowed funds can not be taxed because these funds have been specifically borrowed for the purpose of project but project was delayed and therefore funds were parked in temporary investment in the form of FDR. However the details of these funds are not available on record therefore, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to examine bifurcation of funds borrowed by the assessee and funds owned by the assessee. Interest earned on account of funds borrowed should not be subjected to tax and only interest on balance surplus funds should be subjected to tax. Appeal of the assessee is allowed for statistical purposes.
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