M/S. MEGHMALLAR EASTATE & SERVICES (P) LTD.,GUWAHATI vs. INCOME TAX OFFICER, WARD-3(2), GUWAHATI

ITA 92/GTY/2020Status: DisposedITAT Guwahati15 January 2021AY 2012-135 pages
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What did the Tribunal hold?

The Tribunal held that since the assessee had commenced its project and the interest income was intrinsically linked to the business, the interest expenditure should be allowed. Consequently, only the net interest amount (interest received minus interest expenditure) should be brought to tax.

What were the facts?

The assessee, engaged in real estate development, received loan funds from NEDFI for a project. Due to disputes, the project stalled, and the assessee deposited the loan amount, earning interest income. The assessee sought to set off this interest income against the interest expenditure on the NEDFI loan.

What were the issues?

Whether interest income earned on fixed deposits made from borrowed funds should be taxed, or if it can be netted against the interest expenditure on the borrowed funds, especially when the project for which funds were borrowed is stalled.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 57(iii)

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Income Tax Appellate Tribunal, GAUHATI BENCH: GUWAHATI

Before: Shri A. T. Varkey, JM]

Pronounced: 15.01.2021

These are appeals filed by the assessee against the orders of Ld. CIT(A)- Guwahati dated 23.12.2019 for A.Ys. 2012-13 to 2014-15. 2. At the outset, the Ld. Advocate representing the assessee company Shri Devraj Sahu submitted that only one issue is involved in these three appeal and ground no. 3 which is regarding certain directions given by the Ld. CIT(A) to the AO in the impugned orders are not being pressed.

3.

Per contra, the Ld. D.R for the Department Shri Arup Chatterjee, Addl. CIT Sr. D.R accepted that other than the direction of Ld. CIT(A), there was only one issue in these appeals i.e. in resp

The order continues below.

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