Treatment of Interest Income during construction period
This query is : Resolved
12 December 2009
Hi,
Pls advise me on this:
During the period of pre production of a manufacturing company where commencement of business does not take place, the excess funds procured (thru equity) are deposited as FD, and interest income is earned.
Should that interest income be treated as Income from other sources (sec.56) or as Income from Business(sec.28) ?
Pls give me the case law if any, if it that could be treated as Income from Business.
Pls advise me on this:
During the period of pre production of a manufacturing company where commencement of business does not take place, the excess funds procured (thru equity) are deposited as FD, and interest income is earned.
Should that interest income be treated as Income from other sources (sec.56) or as Income from Business(sec.28) ?
Pls give me the case law if any, if it that could be treated as Income from Business.
12 December 2009
To be included and assessed under the head'income from other sources'.
Citation:- 1) Traco Cable company Ltd Vs. CIT (1969)72 ITR 503(Ker).
2) CIT Vs. Modi Rubber Ltd (1994)208 ITR 379 (Delhi).
Citation:- 1) Traco Cable company Ltd Vs. CIT (1969)72 ITR 503(Ker).
2) CIT Vs. Modi Rubber Ltd (1994)208 ITR 379 (Delhi).
12 December 2009
Income should be treated as other source u/s 56
and no deduction will be allowed in this income for the interest paid by you to bank,
interest on loan should be capitalized,
and interest on FD should be taxable U/H other source
case
Tuticorn Alkali chemical & fertilizer (SC)
and no deduction will be allowed in this income for the interest paid by you to bank,
interest on loan should be capitalized,
and interest on FD should be taxable U/H other source
case
Tuticorn Alkali chemical & fertilizer (SC)
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