2014 (8) TMI 959

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..... king. In the case in hand, there is no dispute that the assessee has received interest from advances made by it to its contractors engaged in infrastructure work, therefore, the interest received by the assessee has to be considered as interest derived from industrial undertaking eligible for deduction u/s 80-IAB of the Act. To sum up, interest amounting to 2,92,88,967/- being interest on advances to contractors is to be taxed under the head “business income” and interest of 3,93,27,585/- being interest on FDR has to be decided afresh - Decided in favour of assessee.
Shri N. K. Billaiya, AM And Dr. S.T.M. Pavalan, JM,JJ. For the Appellant : Shri Salil Kapoor, Shri Vikas Jan Shri Mangesh Kadam & Shri Prakash Gogate For the Respondent .....

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..... he assessee filed a detailed reply to substantiate its claim. The submissions of the assessee did not find favour with the A.O. However, the A.O. allowed the assessee to deduct the interest expenses from the interest income earned from FDR and accordingly treated the interest income (net) ₹ 3,93,27,585/- being earned on FDR and ₹ 2,92,88,967/- being interest on advances to the contractors as 'income from other sources' and allowed the claim of deduction u/s 80-IAB of the Act on the balance of the business income. The assessee carried the matter before the ld. CIT(A) and reiterated its claim. The ld. CIT(A) was of the opinion that the A.O. has wrongly allowed the interest expenses from the interest income. The ld. CIT(A) accordin .....

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..... he say of the ld. Counsel for the assessee that the said decision of the Hon'ble jurisdictional High Court is not applicable to the facts of the present case inasmuch as in the present case surplus money of the assessee has not been deposited in FDs, therefore, the decision is clearly distinguishable on the facts of the case. 5. The ld. D.R. strongly supported the findings of the authorities below. 6. We have carefully perused the orders of the authorities below and also perused the relevant material brought on record before us. The only issue to be decided is whether the FDs was made out of surplus funds of the assessee or out of the borrowings/advances received by the assessee and whether the deposits were made for a short period. We fi .....

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