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2021 (7) TMI 321 - ITAT JAIPURAddition by treating the interest received on STDR made in the pre-commencement period as being income from other sources - whether the interest income received by the assessee on temporary deposit of funds with banks was assessable as income of the assessee or it would go to reduce the cost of borrowings? - HELD THAT:- In the instant case, the assessee company has invested borrowed funds, available during the period starting disbursement and availability of funds, and actual utilization for the purposes the funds were borrowed, and therefore surplus in the intervening period, in short term interest bearing deposits with the bank. There is nothing on record to suggest that the assessee company was bound to utilize the interest so earned on such short term deposits to adjust against the interest paid on borrowed capital and there were any end-use restrictions and it was therefore free to use the interest income in any manner it liked and therefore interest earned by investing borrowed capital in short term deposit is an independent source of income not in any manner connected with construction activities which rightly been brought to tax as income under the head “income from other sources”. Even the ground relating to setting off of interest expenses on borrowed funds U/s 57(iii) against the interest income has been discussed in case of Seshasayee Paper & Boards Ltd. [1984 (4) TMI 17 - MADRAS HIGH COURT] has decided the same against the assessee. Therefore, respectfully following the same, the interest income has to be brought to tax without allowing any deduction u/s 57(iii) towards interest on borrowed capital. - Decided in favour of revenue.
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