Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 1055 - AT - Income TaxInterest Income & Other Income vs. Pre-Operative Expenses - Disallowance of expenses - assessee has not earned any business income relating to the project which is yet to commence - AO treated the expenditure claimed by the assessee as part of the capital work-in-progress and the interest income earned by the assessee, he has treated the same as income from other sources which assessee has earned by depositing the funds in fixed deposit - HELD THAT:- Assessee has entered into escrow agreement with original lenders (Axis Bank Limited) and Escrow Bank by Standard Chartered Bank, as per the terms of the agreement assessee has to maintain reserve amounts as per clause (ii) of the construction of the Escrow Agreement as per which assessee has to maintain statutory Dues Account, Project Construction Account, Operation And Maintenance Account and the NHAI Account, Debt Payment Account and other similar accounts. Assessee was allowed to withdraw only through Escrow Account for withdrawal during construction period and also assessee was allowed to make investment only in permitted investments. By respectfully following the terms of agreement assessee has made the investment through permitted investments and earned the interest income. The relevant data are submitted by the assessee as part of the Paper Book. It clearly shows that the operation of funds are relating to the same project as well as the interest earned through permitted investments are also part of the same project. As held in the above said case the interest earned by the assessee through Due Account and permitted investment are part of the same project and accordingly, we direct the AO to allow the interest earned by the assessee as capital income and should be reduced from the capital work-in-progress of the project. Accordingly, Ground raised by the assessee are allowed.
|