Held that the borrowings through secured debentures before commencement of its business and earned interest income by investing the surplus funds in perpetual debt instrument, the interest income which is assessable as income from other sources. Deduction for interest expenditure is deductible under S. 57(iii) as the entire investment was out of borrowed funds. (AY.2014-15)
Muthoot Agri Projects & Hospitalities (P) Ltd. v. ACIT (2024) 229 TTJ 468 / 237 DTR 220 / 38 NYPTTJ 439/ 164 taxmann.com 59 (Cochin)(Trib)
S. 57 : Income from other sources-Deductions Secured debentures-Interest income during pre-commencement period-Entire investment was out of borrowed funds-Interest expenditure is allowable as deduction. [S.56, 57(iii)]