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TMI Blog2021 (2) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... ] than assessing the entire interest income u/s.57 of the Act - HELD THAT:- The fact remains that this issue has neither been examined in the course of assessment nor in the CIT(A) s order. We therefore draw support from their lordships above decision and direct the Assessing Officer to finalise necessary computation on netting basis. No other ground has been pressed before us. - I.T.A. Nos. 141 & 142/HYD/2017 - - - Dated:- 9-2-2021 - Shri S.S. Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the for Assessee : Shri S. Rama Rao, AR. For the for Revenue : Shri Sunil Kumar Pandey, DR. ORDER PER BENCH : These two assessees appeals for AYs.2012-13 2013-14 arise from the CIT(A)-3, Hyderabad s common order dated 14-10-2016 passed in appeal Nos.1432/14-15 0304/1516/CIT(A) involving proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, the Act ]. Heard both the parties. Case files perused. 2. The assessee has raised the following substantive grounds in appeal No.141/Hyd/2017 for AY.2012-13: 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to obtain loan from IDBI Particulars Loan Amount Received (Rs.) FD made as a Pre-requisite (Rs.) 1st disbursement in AY.2012-13 17,27,00,000 4,50,00000 2nd disbursement in AY.2013-14 49,94,23,308 16,10,00,0 On these FDs the appellant received interest as under: A.Y.2012-13 Rs. 9,26,440/- A.Y.2013-14 Rs. 1,92,76,530/- The appellant reduced the above interest from capital work in progress. Whereas the Assessing Officer treated the same as income from other sources. The Assessing Officer relied on Tuticorn Alkali Chemicals and Fertilisers Ltd 227 ITR 172 ( SC) In this case interest earned by assessee before commencement of business on short term deposits with banks out of term loans secured from financial institutions was considered as income chargeable under the head income from other sources and would not go to reduce the interest payable by the assessee. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f) Reliance is also placed on the decision of DCIT Vs Facor Power Ltd (2016) 380 ITR 474 wherein the Hon'ble Delhi High Court held interest earned during pre-operative period on deposits made out of share capital is a capital receipt. 9. The information on record is carefully considered. The Hon'ble ITAT Hyderabad in the case of Kakinda SEZ Pvt Ltd Vs ACIT 141 ITO 635 held that interest earned on FDs during pre-operative period are to be brought to tax under the head 'income from other sources'. The facts in this case were the assessee obtained large amount of secured loans, part of which was kept in FDs with the banks. The interest earned on these FDs were set off against preoperative expenses by assessee. The Hon'ble Tribunal considered the decision of Tuticorn Alkali Chemicals and Fertilisers Ltd ( cited supra) and Indian Oil Panipat Power Consortium Ltd (cited supra ) and various other precedents on this issue held that Interest paid on borrowed funds has no connection with receipt of interest and held that interest payable cannot be allowed as deduction U/s 57(iii). Further in appellants case as verified from IDBI loan sanction letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,63,989 The computation of A.Y.2013-14 read as under: Amount Income from Business Net profit as per Profit and Loss Account (18,77,886) Add: Depreciation considered separately 7,82,663 Donation US 37 3,06,782 Interest Others 3,37,633 Audit fee disallowed u/s. 40(a)(ia) 2,24,720 16,51,798 (2,26,088) Less: Depreciation as per IT Act 5,81,552 Disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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