Interest income is not seperately assessable & can be adjusted against interest expenditure incurred by the assessee

Marvel Vivacity Condominium Vs ITO

Whether interest income is not seperately assessable, rather to be adjusted against interest expenditure incurred by the assessee during relevant year – YES: ITAT

– Assessee’s appeal allowed : PUNE ITAT

Whether interest income is not seperately assessable, rather to be adjusted against interest expenditure incurred by the assessee during relevant year – YES: ITAT

++ the limited issue which arises in the present appeal is where the assessee has shown overall loss of Rs. 11,22,908/- and in such circumstances, whether interest earned on FDRs of Rs. 7,77,226/- is separately assessable in the hands of assessee. In cases, where the assessee has net surplus from the activities carried on by it and had also interest income on FDRs, then in such circumstances, interest income is taxable in the hands of assessee. Such is the proposition laid down by the Bombay High Court in CIT Vs. Common Effluent Treatment Plant (Thane Belapur) Association. However, where the assessee has shown excess of expenditure over income i.e. where the expenditure is more than receipts earned during the year, then in such circumstances, the ratio laid down by the High Court of Punjab & Haryana in CIT Vs. Maruti Employees Co-Operative House Building Society Ltd. is squarely applicable;

++ since the assessee in the present case is housing society and the issue before the High Court of Punjab & Haryana in CIT Vs. Maruti Employees Co-Operative House Building Society Ltd. was in respect of housing society, applying the same parity of reasoning, this Tribunal holds that interest income is to be adjusted against expenditure incurred by the assessee during the year and the interest income is not separately assessable in the hands of assessee.

ITA No.1373/Pun/2018