IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER &

SHRI MANISH AGARWAL, ACCOUNTANT MEMBER [Assessment Year : 2021-22]

Max Square Ltd. vs ITO L-12, Max Tower, Sector-16-B Ward-5(1)(5)

Gautam Budha Nagar N oida Noida, Uttar Pradesh-201301 PAN-AAGCN5808G APPELLANT RESPONDENT Appellant by Shri Anil Bhalla, CA &

Shri Nitin Kumar Sharma, CA Respondent by Shri Gouranga Chandra Das, Sr. DR Date of Hearing 08.12.2025 Date of Pronouncement 13.02.2026

ORDER

PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated

30.05.2025 of Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2020-21/10308419 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 07.12.2023 passed u/s 143(3) r.w.s. 144B of the Act pertaining to Assessment Year 2021-22.

2. Brief acts of the case are that the assessee is a company, engaged in the business of real estates development and started construction of commercial complex project “Max Square” at sector

129, Noida. The assessee borrowed funds from Indusind Bank amounting to INR 29.45 crores for the construction and further raised funds through issue of Equity/CCD’s. The funds which remained un-utilized, were invested temporary in FDRs from which interest was received of INR 63,77,502/- and was credited to the cost of construction. However, the AO has held the same as taxable under the head “Income from Other Sources”.

3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 30.05.2025, confirmed the addition made by the AO and dismissed the appeal of the assessee.

4. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-

1. “The Learned CIT(A) has erred both on facts and in law in confirming the addition of ₹ 63,77,502 made by the Assessing Officer under the head "Income from Other Sources" without appreciating that the said interest income arose from the temporary investment of surplus funds which were inextricably linked to the capital borrowed for the purpose of constructing the real estate project "Max Square." The CIT(A) failed to consider that such interest is capital in nature and should have been adjusted against the cost of the asset, in accordance with judicial precedents.

1.1. The Learned CIT(A) has erred both on and in law in disregarding the binding judicial pronouncements of the Hon'ble Supreme Court in the case of Bokaro Steel Ltd. [1999] 236 ITR 315 (SC), and the Hon'ble Delhi High Court in the cases of NTPC Sail Power Company (P) Ltd. [2012] 25 taxmann.com 401 (Del) and Indian Oil Panipat Power Consortium Ltd. [2009] 315 ITR 255 (Del), which have clearly held that interest earned from temporary parking of borrowed funds intended for project development is inextricably linked to the setting up of the project and hence constitutes a capital receipt not liable to tax.

1.2 The Learned CIT(A) has erred both on facts and in law in failing to appreciate that the assessee had borrowed capital specifically for the construction and development of a commercial real estate project and had also raised funds via CCDs and equity for the same purpose. The temporary parking of such funds in fixed deposits was necessitated by the time gap deployment, and the interest earned thereon was adjusted against the project cost, thereby not yielding any real income.

1.3 The Learned CIT(A) has erred both on facts and in law in rejecting the explanation and evidences submitted by the assessee without establishing that the interest income earned was not inextricably linked to the project. The CIT(A) did not bring any material on record to show that the surplus funds were unrelated to project borrowings or were idle surplus.

1.4 The Learned CIT(A) has erred both on facts and in law by not considering detailed submissions, evidences, and legal preced