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2018 (2) TMI 425 - AT - Income TaxInterest earned on investment out of funds borrowed from Bank - income from other sources - set off of interest income from the project cost as development expenditure account - Held that:- This issue is squarely covered in favour of the assessee by the decisions of the Hon’ble Supreme Court in the cases of Bokaro Steel Limited (1998 (12) TMI 4 - SUPREME Court) and Karnal Cooperative Sugar Mills Limited (1999 (4) TMI 7 - SUPREME Court) as rightly held by the ld. CIT(Appeals). Assessee clearly show that the investment out of funds borrowed from Bank was temporarily made by the assessee to reduce the interest cost and since such utilization was directly linked with the activity of construction of Mall-cum-Shopping Complex, which formed the capital structure of the assessee-company, the interest earned on investment was viewed as capital receipts, which was going to reduce the cost of construction - if the said interest income was to be held as liable to tax in the hands of the assessee under the head “income from other sources”, the assessee was entitled for deduction on account of interest paid to Allahabad Bank on the borrowed funds under section 57(iii) as held in the case of Karnal Cooperative Sugar Mills Limited (supra) and such interest payment being more than the interest earned in both the years under consideration, no addition was liable to be made to the total income of the assessee on this issue. We, therefore, find no infirmity in the order of the ld. CIT(Appeals) giving relief to the assessee - Decided against revenue
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