Urgent - Treatment of Interest

Dear Colleques

We are a property developer. We borrowed Rs 5 crores from the bank as term loan. The term loan was disbursed.Since we did not have any immediate committment for the funds,we placed the same under Fixed Deposit for 45 days. Interest paid on the term loan was capitalised after deducting interest earned. But for Income Tax purpose, my auditor says that the same should be shown seperately. Balance of Income tax should be paid after adjusting the TDS deducted on the interest income.

Is clubbing provision not applicable? Can not we adjust this interest income against our business loss?

Thanks

S.Giri