Reduction of FDR interest from pre-operative expenses

[NAV HIND JAIN]

CAN FDR INTEREST PURCHASED FOR BANK GURANTEE BE REDUCE FROM PREOPERATIVE EXPENSES OF SAME PERIOD.

[Rama Krishana]

The answer to this issue is dependent upon the the decision of nature of FDR. I think the following decision would help to determine your issue: 2008 -TMI - 31404 - RAJASTHAN HIGH COURT

[DEV KUMAR KOTHARI]

see my articles on subject of income during construction period or prior to commencement of business on this website.

AI Summary

FDR interest treatment may be deductible from pre operative expenses depending on the nature and purpose of the FDR. Whether interest on an FDR taken to secure a bank guarantee can be reduced from pre operative expenses hinges on the nature and purpose of the FDR and its direct nexus to preparatory business activity; the determination is fact specific and guided by tax principles and relevant precedent.