TMI Blog2007 (6) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon substantial question of law: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that interest on moneys borrowed for the period prior to the commencement of business can be allowed as deduction from the interest u/s 57 of the Act while computing "Income from Other Sources" in respect of the interest received"? 2. The facts leading to the above substantial question of law are as under: 3. The assessee is a Partnership Firm, engaged in the Real Estate business. The relevant assessment years 1997-98 and 1998-99 and the corresponding accounting years ended on 31.03.1997 and 31.03.1998, respectively. A survey under Section 133A of the Income-tax Act ("Act" in short) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and set aside the orders of the C.I.T.(A). Hence the present tax cases by the Revenue. 4.Learned Standing Counsel appearing for the Revenue submitted that the assessee had set off interest earned, prior to commencement of the business operation, against the expenses. The assessee is wrong in setting off the interest prior to the commencement of the business operation against expenses. The interest income earned prior to commencement of the business has to be assessed under the head "income from other sources". Hence, the Assessing Officer is right in assessing the interest income under the head "income from other sources". 5.Heard the counsel. The Tribunal allowed the appeals by following its own earlier order and accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty etc. would be reduced from the cost of the assets and it would not be treated as income. Similar view was expressed by the Supreme Court in the case Karnal Co operative Sugar Mills Ltd. (supra).[2000]243ITR2. Identical view was also taken by the Supreme Court in the case of Bongaigaon Refinary and Petrochemicals Ltd. [2001]251 ITR 329.and Karnataka Power Corporation (supra). [2001] 247 ITR 268. 5. In our opinion, in view of the above clear cut ruling by the Supreme Court it is necessary to give a finding of fact in regard to monies that were kept in deposit from out of the share application monies. In the light of the Supreme Court decision in Tuticorin Alkali Chemicals and Fertilizers Ltd. (supra), [1997] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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