2013 (12) TMI 1713

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....was justified in rejecting the appeal of the appellant-assessee holding that the interest earned on deposits kept with Banks was taxable under S. 56 of the Act which interest was earned when the business of the assessee was not set up at all? 2. On the facts and circumstances of the case and in law whether the Ld.CIT(A) Kolhapur was correct in his decision confirming the decision of the A. 0. to tax the interest income as income from other sources, even though the deposits kept with Banks in pre set up period had direct link with the establishment of Soot Girini and without arty intention to earn any income? 3. On the facts and circumstances of the case and in law whether the Ld. CIT(A)-Kolhapur was correct in his decision taken by hi....

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..... 2.1 The same has been opposed before us on behalf of assessee and learned Authorized Representative submitted that the authorities below has not justified in holding that the interest earned on deposits kept with Banks was taxable u/s.56 of I.T. Act. On the other hand, learned Departmental Representative has supported the order of authorities below. 2.2 After going through the rival submissions and material on record, we find that the issue is with regard to the treatment of the interest earned of Rs. 41,83,517/- on bank deposit for tax purpose. According to the Assessing Officer, only interest received from cooperative bank is exempt u/s.80(p) and interest income received from nationalized banks will be taxable in the assessee's ha....

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....m other banks. Manufacturing has not started during the relevant previous year. The assessee claimed a deduction of the amount of Rs. 33,95,068/- under section 80P of the Income-tax Act against which an amount of Rs. 27,83,940/- received from Shivaji Sahakari Bank Ltd. was allowed. The Assessing Officer did not allow the claim of Rs. 15,40,341/- attributed to various expenses on the ground that during pre-business commencement period, the expenses ought to be capitalized which was evident that funds given by the Government of Maharashtra as their contribution towards share capital was deposited with various banks primarily as the same was idle fund lying with the assessee pending development of land and construction of factory building and ....