Held, that the assessee had filed complete details of fixed deposits and has provided details of letters of credit and bank guarantee against which fixed deposit was taken and that the interest earned on fixed deposit was inextricably linked to the setting up of the hotel as such. Therefore, the findings of the Commissioner (Appeals) in treating interest of as income from other sources was erroneous and against the facts of the case. The Assessing Officer was to consider the interest of as part of capital receipt to be deducted from the cost of project. (AY. 2009-10)
Vatika Hotels P. Ltd. v. Asst. CIT (2023)101 ITR 21/199 ITD 741 (Delhi) (Trib)
S. 57 : Income from other sources-Deductions-Purchase of land for construction of hotel building-Capitalisation of project and preoperative expenses pending-FDs receipts purchased for letter of credit and bank guarantees given to various suppliers-Interest income not income from other sources-AO to consider interest as part of capital receipt and to be deducted from cost of project. [S. 56, 57(ii)]