TaxTMI 
TaxTMI 
2017 (10) TMI 372
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....CIT (Appeals) has erred in law by not appreciating that the Orissa Project had not come into production during the year under consideration, under the circumstances, how and why a sum of Rs. 1077,31 lacs has been charged to revenue account after decapitalization of interest/other misc. income. 3. That on the facts & circumstances of the case, the Ld. CIT (A) is erred in law and failed to understood that in addition to interest income of Rs. 6,11,95,775/- income of Rs. 1,32,88,663/- on sale of investment transformed to Orissa Plant account to smiling reduce the project cost has to be charged to tax as short term gain and etc. Ld. CIT (A) vide order dated 08.02.2013 uphold the AO's action in this regard. 4. That on the facts and in th....
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....borrowed amount for making short term investments. The interest earned from such short term deployment of borrowed funds in investments, was, therefore, reduced from the interest payable on loans availed for Orissa Project and the net amount was capitalized with the cost of the project in the books of account. The interest earned on such short term investment stood at Rs. 6,11,95,775/- which was reduced from the interest cost of Rs. 21,45,47,896/- on the borrowed amount. The Assessing Officer added the interest earned on temporary deployment of borrowed funds in short term investment, as income from other sources, treating the same as sale of investment transferred to Orissa Project. The AO also imposed penalty on this addition u/s. 271(1)(....
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....ere remains no question for imposition of penalty. 5. We have considered the rival submissions and have gone through the entire material available on record and we find no justification to interfere with the impugned order. It is notable that the fact of amounts borrowed for Orissa Project, interest cost on such borrowed amounts, their partial utilization in the project and its partial deployment in investment, the interest earned thereon, setting off of this interest earned from the interest incurred on borrowed funds and capitalization of remaining amount of interest to the cost of Orissa Project, stand fully and truly disclosed before the Assessing Officer, as also reflected from the books of account of the assessee. The addition of int....
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....ds is regarding the treatment of Rs. 6,11,95,775/- being interest earned on temporary funds and the income of Rs. 1,32,88,663/- on sale of investment transferred to Orissa Plant. According to the Assessing Officer, such interest income has to be brought to tax as income from other sources which has been upheld by the CIT(A) by relying on the decision of the Hon'ble Supreme Court in the case of Tuticorn Alkali Chemicals and Fertilizers Limited (supra) and various other decisions. It is the submission of the ld. counsel for the assessee that such interest income should be reduced from the capital work in progress. It is his alternative contention that if the interest income is taxed as "income from other sources" then deduction should be ....