Pre Oprative income
This query is : Resolved
25 May 2009
Before Production Intrest Income can be capitalised or not.
Intrest recd 50000 Production not start tds deduct 10000 & other exp 15000. it can be Capitalised or not
Intrest recd 50000 Production not start tds deduct 10000 & other exp 15000. it can be Capitalised or not
25 May 2009
Interest will be taxed without any deduction as income from other sources, also as per co. act its other income
you can show 15,000/- as preoperative expenses.
you can show 15,000/- as preoperative expenses.
25 May 2009
The matter of the taxability of the any interest earned during the construction period in the hands of the assessee has been considered by by Supreme Court Of India in the case of TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD vs CIT 227 ITR 172 and has ruled that Any interest earned during the construction period is taxable in the hands of the assessee and it can not be set off against the preoperative expenditure. In this case The assessee deposited part of the borrowed funds on term-deposits and set off this interest against the interest payable. ITAT decided that the principles of accountancy was not always good law. The interest earned was income from other sources. It could not set off against interest payable. Following question of law was raised by for the consideration of the Apex Court
"Whether, on the facts and in the circumstances of the case, interest derived by the assessee from the borrowed funds which were invested in short-term deposits with banks would be chargeable to tax under the head 'Income from other sources' or would go to reduce the interest payable by the assessee on the term loans secured by the assessee from financial institutions, which would be capitalised after the commencement of commercial production ?"
While deciding on the above matter, the Hon’ble Court has uphold the order of the ITAT considering the decision of various courts on the issue and deceided that such income us taxable as other income and can not be set off agsinst the internst paid or any other expenditure incurred duinrg that period. For further details you may visit my blog by available on my profile.
"Whether, on the facts and in the circumstances of the case, interest derived by the assessee from the borrowed funds which were invested in short-term deposits with banks would be chargeable to tax under the head 'Income from other sources' or would go to reduce the interest payable by the assessee on the term loans secured by the assessee from financial institutions, which would be capitalised after the commencement of commercial production ?"
While deciding on the above matter, the Hon’ble Court has uphold the order of the ITAT considering the decision of various courts on the issue and deceided that such income us taxable as other income and can not be set off agsinst the internst paid or any other expenditure incurred duinrg that period. For further details you may visit my blog by available on my profile.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- TDS U/S. 194NF
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Donation Receipt u/s 80G
- MIS MATCH OF INVOICE NUMBER
- VERIFICATION OF REFUND RELATED
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
