2020 (10) TMI 508

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....her sources" ignoring the facts that the hotel of the assessee is under construction and business of the assessee has not commenced and the funds on which interest was earned were inextricably linked to the setting up of the Hotel and thus the said interest income has been netted off against the interest paid by the assessee and also ignoring the submissions and evidences placed on record. Thus the addition so made should be deleted. 3. The assessee is a company running a five star hotel in Goa. During the year under consideration, the hotel of the assessee was in process of construction. The assessee has taken an ECB for funding the said construction and which was parked in the FDRs during the year. The assessee has deducted interest ea....

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..... 6. The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused the material available on record. The Tribunal in assessee's own case for Assessment Year 2012-13 being ITA No. 6597/Del/2016 dated 29.11.2019 held as under: 6. "After hearing both the parties and on perusal of the material placed on record and the judgments relied upon by the Id. counsel, we find that it is undisputed fact and even accepted by the Assessing Officer that the assessee has taken Foreign ECB loan of Rs. 82.37 crores for the purpose of acquisition of a capital asset, i.e., renovation and refurbishment of hotel acquired by the assessee under SARFEASI Act from SBI, Mumbai. The entire ECB loan ....

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....rporation (supra). The id. Assessing Officer has relied upon the judgment of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) to tax the interest earned on FDRs as income from other sources on the facts of the present case. This precise issue had came up in the case of Indian Oil Panipat Power Consortium Ltd. (supra), wherein explaining the principle laid down in the decision of Tuticorin Alkali Chemicals and Fertilizers Ltd., Bokaro Steel Ltd. and Challapalli Sugars Ltd. (supra), the Hon'ble Jurisdictional Court held that the test which permeates through the judgment in Tuticorin Alkali Chemicals (supra) is that, if funds have been borrowed for setting up of a plant and if the funds are surplus an....