2014 (8) TMI 959

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.... 6,86,16,552/- as "income from other sources" instead of "business income" and thereby denying the claim of deduction u/s 80-IA of the Income Tax Act, 1961. 3. The assessee is engaged in infrastructure development and during the year the assessee was involved in development of SEZ in Nagpur District by the title 'MIHAN' project. The return for the year was filed by it on 24-9-2008 declaring total income at Rs. 'nil'. The total income from the project MIHAN was at Rs. 53.58 crores and the same was claimed as exempt u/s 80-IAB of the Act. The return of income was selected for scrutiny assessment. Statutory notices were accordingly issued and served upon the assessee. During the course of scrutiny assessment proceedings, the A.O. noticed th....

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....der the head "income from business and profession". Aggrieved by this, the assessee is before us. 4. Before us, the ld. Counsel for the assessee strongly submitted that the money which was parked in FD was the money which was not immediately required for the purposes of the business. The FDs were made only for short period and it is not out of the surplus funds but the same were purchased from the borrowings made by the assessee. Therefore, there is a direct nexus between the business activities of the assessee and the interest earned from FDs. To support this contention, the ld. Counsel for the assessee has relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Lok Holdings (2009) 308 ITR 356 (Bom). The ld. counsel f....

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....nd borrowing of the assessee and whether the FDs were for short period of time. The assessee is directed to file necessary details before the A.O. The A.O. is expected to give a fair and reasonable opportunity of being heard to the assessee. 7. The second issue relates to the interest received by the assessee on advances made by it to its various contractors who are engaged in infrastructure work. We find that an identical issue has been considered by the Hon'ble Gujarat High Court in the case of Nirma Industries, 283 ITR 402 where the Hon'ble Gujarat High Court has held that the interest received on delayed payment by the debtor is to be included in the profit of the industrial undertaking. In the case in hand, there is no dispute that ....