TREATMENT OF INTEREST RECEIVED BY INDUSTRIAL UNIT OF SEZ U/S10AA

[KISHOR DATTANI]

EXEMPT OR Taxable interst received from FDR by unit covered U/S 10AA of IT Act. Which is kept as margin againt loan taken from bank and utilised for industrial undertaking.

[Rama Krishana]

What is your query?

[KISHOR DATTANI]

My querry is assessee is manufacturer and exporter of jewellery and unit is situated in SEZ covered U/S 10AA. For obtaining various facilities from bank such as advance Gold loan against export order assessee have to make FDR as margin money against LC.Said FDR is directly related with gold procurment from Bank itself and have direct nexus with business carried on.

ITO wants to treat such interest received against FDR as Income from Other source and not Profit from industrial unit.

Kindly through some light and legal decisions directly related.

 

 CA KISHOR DATTANI

AI Summary

Interest from FDR in SEZ: Taxed as 'Income from Other Sources' under Section 10AA, not industrial profit. An individual inquired about the tax treatment of interest received from a Fixed Deposit Receipt (FDR) by a Special Economic Zone (SEZ) unit under Section 10AA of the Income Tax Act. The FDR serves as margin money against a bank loan used for an industrial undertaking. The tax authority intends to classify the interest as 'Income from Other Sources' rather than as profit from the industrial unit. The individual, a manufacturer and exporter of jewelry, seeks guidance and relevant legal decisions on this matter.