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| The Tax Publishers2020 TaxPub(DT) 3829 (Hyd-Trib) INCOME TAX ACT, 1961
Section 56
Interest earned by assessee on temporarily parking of loan funds in banks, pending its full deployment in ongoing construction of projects, was in the nature of capital receipt and was thus, required to be set off against the cost of capital work-in-progress.
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Income from other sources - Taxability - Interest earned on temporarily parking of loan funds in banks, pending its full deployment in ongoing construction of projects -
Assessee secured huge loan to the tune of Rs. 405 crores as on 31-3-2009 by equitable mortgage of company's land by way of depositing title deeds and invested in acquiring assets for business of the company. Out of the loans taken, assessee made fixed deposits with Bank to the tune of Rs. 95 crores for earning interest on deposits and interest received was not offered to tax. AO taxed interest on FDRs as income from other sources. Held: Interest earned by assessee on temporarily parking of loan funds in banks, pending its full deployment in ongoing construction of projects, was in the nature of capital receipt and was thus, required to be set off against the cost of capital work-in-progress.
Followed:Kamat Hotels (India) Ltd. v. Addl. CIT [ITA No. 1078/Mum/2013, Order, dated 3-10-2017]
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. : 2009-10 to 2015-16
IN THE ITAT, HYDERABAD BENCH
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