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2020 (10) TMI 508 - ITAT DELHIInterest earned on FDRs as “income from other sources” - assessee is under construction and business of the assessee has not commenced and the funds on which interest was earned were inextricably linked to the setting up of the Hotel and thus the said interest income has been netted off against the interest paid by the assessee and also ignoring the submissions and evidences placed on record - HELD THAT:- Interest on FDRs during the period has been netted off against interest paid by the assessee which is identical to the fact of earlier Assessment Year 2012-13. There is no change in the circumstances in this year. CIT(A) was not correct in confirming the addition by taking different opinion from the earlier A.Y. 2012-13 taken by the earlier CIT(A). It is pertinent to note that once the ECB loan which is to be utilized for capital expenditure only, then, any interest earned on funds temporarily parked in FDRs is inextricably linked with the setting up of hotel of the assessee, and the same should be held as capital receipts only and is permitted to be set off against the capital expenditure as per the provisions of Income Tax Act. The order of the CIT(A) is set aside. Hence, appeal of the assessee is allowed.
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