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2022 (8) TMI 1182 - AT - Income TaxAddition u/s 56 - income from other sources - interest income earned on surplus funds during the pre-commencement of business - contention of assessee that the deposits are inextricably linked with the funds taken for capital projects - “margin money deposit for bank guarantee” and “ deposits for foreign currency buyer’s credit” - AO found that the said FDRs had been made out of surplus fund available to the assessee - As observed that, the assessee has failed to established that, the deposits are inextricably linked with the funds taken for capital projects HELD THAT:- As observation made by the Ld. CIT (A) without bringing on record of any materials and without appreciation of the relevant records on the issue to came to such conclusion and decided the Appeal in favour of the assessee. The Ld. CIT (A) while relying on the documents produced by the Assessee, ought have called for the remand report from the Assessing Officer and should have examined issue. But on going though the Order of the CIT (A), we are unable to understand the basis for such observations and the conclusion arrived by the CIT(A) in favour of the Assessee. Thus, the said approach of the CIT (A) is found to be erroneous. CIT (A) should examine the cash/fund flow statement to decide as to whether the interest on FDR’s from the surplus funds or not. Further the Ld. CIT(A) has to call for the remand report from the AO and after providing the opportunity to the Assessee and there after shall come to the conclusion in the matter. If the Assessee is found with any earned interest on FD made out of the surplus funds, such income should be treated and assessed as income from other sources as held in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd [1997 (7) TMI 4 - SUPREME COURT] We deem it appropriate to remit the issue in dispute to the file of Ld. CIT(A) to decide in light of our above observations. Accordingly we partly allow the revenues grounds.
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