Capitalization of interest income
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 November 2015
Hello,
Please suggest reference of case laws involving below mentioned issue:-
A Private limited company borrowed some money for capital expenditure. It invested unutilized funds in Fixed deposits and reduced the interest income from CWIP on assumption that it is income from funds borrowed for capital expenditure.
Is company correct in its treatment or the income is chargeable to tax.
Please suggest reference of case laws involving below mentioned issue:-
A Private limited company borrowed some money for capital expenditure. It invested unutilized funds in Fixed deposits and reduced the interest income from CWIP on assumption that it is income from funds borrowed for capital expenditure.
Is company correct in its treatment or the income is chargeable to tax.
04 November 2015
Not correct. Assessable under IFOS.
Inference is from -
Tuticorin Alkali Chemicls & Fertilizers Ltd Vs. CIT (1997)227 ITR 172 (SC).
Inference is from -
Tuticorin Alkali Chemicls & Fertilizers Ltd Vs. CIT (1997)227 ITR 172 (SC).
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Querist : Anonymous
Querist :
Anonymous
(Querist)
04 November 2015
Thank you sir,
But according to company it is a preoperative income, like interest expenditure is capitalized before the asset is put to use, in the same manner why interest income from that borrowed fund for asset cant be capitalized.
But according to company it is a preoperative income, like interest expenditure is capitalized before the asset is put to use, in the same manner why interest income from that borrowed fund for asset cant be capitalized.
04 November 2015
PL go through the following decision to substantiate your view.
CIT Vs.Jaypee DSC Ventures Ltd (2011) 335 ITR 132 (Del).
CIT Vs.Jaypee DSC Ventures Ltd (2011) 335 ITR 132 (Del).
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