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2016 (10) TMI 846 - ITAT NEW DELHI

2016 (10) TMI 846 - ITAT NEW DELHI - TMI - Treatment to amount on account of interest on FDRs to be 'income from other sources' - nature of income - Held that:- As decided in Jaypee DSC Ventures [2011 (3) TMI 309 - Delhi High Court ] the bank guarantee was furnished as a condition precedent to entering into the contract and further it was to be kept alive to fulfil the obligations - interest earned by the assessee on the FDRs has intrinsic and inseggregable nexus with the work undertaken and, th .....

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ee is directed against the Order dated 4.3.2013 passed by the Ld. Commissioner of Income Tax(Appeal-III), New Delhi relevant for the assessment year 2009-10. 2. The grounds raised in the Appeal read as under:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the learned C1T(A) has erred both on facts and in law in confirming th .....

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ation to earning of said interest on FDRs. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the appellant that the interest earned during construction period will go to reduce the cost of construction and as such will not be assessable as 'income from other sources'. 5. In the alternative and without prejudice to the above, the learned CIT(A) has erred, both on facts and in law, in ignoring the fact that .....

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d and duly complied with. In response to the notices assessee s AR filed the various details. Thereafter, the AO made the addition of ₹ 12,15,015/-. The reasons for making addition arose from the fact that during the assessment proceeding the AO found that the assessee had a deposit in the shape of FDR with the Indusind Bank on which during the year the assessee has earned interest of ₹ 12,15,015/-. AO observed that since the said interest was not shown as income under the head incom .....

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he interest income of ₹ 12,15,015/- under the head Income from other sources. 5. Against the aforesaid order of the Ld. CIT(A), assessee is in appeal before the Tribunal. 6. At the time of hearing, ld. Counsel of the assessee has stated that the issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Jaypee DSC Ventures Ltd. reported in (2012) 17 taxmann.com 257 (Delhi). He further stated that Ld. CIT(A)-29, New Delhi has also de .....

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ase of plant and machinery and hence held that income earned on such deposits is incidental to the acquisition of assets and accordingly, capitalized. In the present case also it was obligatory to provide the bank guarantee for which fixed deposit has been made by the assessee to commence its business. Therefore, the interest income earned is nothing but the business income of the assessee and the act of assessee to reduce work in progress to the extent of interest received and Ld. CIT(A) for th .....

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n the orders passed by the Ld. CIT(A) as well as the decision mentioned by the Ld. CIT(A) in the impugned order. 8. We have heard both the parties and perused the records. We have also gone through the orders of the Ld. CIT(A) for the subsequent assessment years i.e. 2010-11 & 2011-12 wherein the assessee s contention was accepted by the Ld. CIT(A) and similar additions was deleted by the Ld. CIT(A). We find that Ld. DR could not produce any order of the higher authorities contrary to the fi .....

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