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In the given facts in (2022] 28 ITR (Trib)-OL 110 (ITAT[Chand]) the ADB loans had been taken by the assessee on which interest income of Rs. 246.96 lakhs had been earned and that these loans were to be utilised for specific projects and on account of delay in the project the same had been parked in temporary funds.

Given the nature and composition of interest income the bench held that the interest received to the extent of ADB loan parked in investments in FDRs is not revenue in nature and not liable to be taxed under the head “Income from other sources”.

From the above doctrine there is almost a clear pointer for the taxpayer to have separate accounting of interest income in accounts with one for interest earned on surplus funds and the other for interest earned on funds earmarked for projects and capital investments.

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