KGA INVESTMENTS,MUMBAI vs. ITO 17(2)(1), MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)-28, Mumbai dated 02/03/2017 for A.Y.2013-14 in the matter of order passed u/s.143(3) of the IT Act. 2. The only grievance of assessee relates to decline of deduction u/s.57(iii) in respect of interest paid on the borrowings which was used for earning interest income. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that assessee is engaged in the business of building construction. During the year under consideration, assessee has borrowed some funds for the purpose of its business. Since the funds were not immediately required in order to reduce interest liability / expenditure, the M/s. KGA Investments assessee put fund temporarily in fixed deposit. On such deposits, the assessee has interest income which he netted out of the interest expenditure and the balance interest expenditure were carried to the balance sheet and added to the work in progress. The AO was of the view that since fund was borrowed for the business purpose, the same is deductable out of business income only and assessee was to pay tax on the interest income earned from the deposit so made under the head income from other sources.