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2015 (1) TMI 45 - AT - Income TaxNetting off interest earned on deposit of margin money with the interest payable on term loans - CIT(A) allowed the relief following the decision of Hon ble Jurisdictional High Court in the case of CIT Vs. Sasan Power Ltd. vide 2012 (1) TMI 25 - DELHI HIGH COURT and Shree Ram Honda Power Equipment 2007 (1) TMI 86 - HIGH COURT, DELHI . The Revenue has not disputed the applicability of the above decisions to the facts of the assessee s case. From ground No.2 of the Revenue s appeal, it is evident that the Revenue is disputing the matter in appeal because the Revenue has filed the SLP against the decision of Hon ble Jurisdictional High Court in the case of Sasan Power Ltd. (supra) which is pending for adjudication. - Held that - The decision of Hon ble Jurisdictional High Court is binding upon all the authorities working within the jurisdiction of the said High Court. Therefore, the decision of Hon ble Jurisdictional High Court in the case of Sasan Power Ltd. (supra) is binding on the ITAT as well as the CIT(A) in Delhi irrespective of the Revenue s challenge to the above decision in SLP before the Hon ble Apex Court. Unless and until the said decision is modified or reversed by the Hon ble Jurisdictional High Court, the same would be binding on all the authorities within the jurisdiction of Hon ble Delhi High Court. In view of the above, we find no infirmity in the order of learned CIT (A). - Decided against Revenue.
Issues:
1. Disallowance of interest earned on deposit of margin money with interest payable on term loans. 2. Applicability of the decisions in the cases of CIT Vs. Sasan Power Ltd. and CIT Vs. Shree Ram Honda Power Equipment. Issue 1: Disallowance of interest earned on deposit of margin money with interest payable on term loans The Revenue appealed against the order of learned CIT(A)-VI, New Delhi for the AY 2009-10, challenging the deletion of an addition of Rs. 1,99,42,000 made on account of disallowance of netting off interest earned on deposit of margin money with the interest payable on term loans. The CIT(A) allowed the relief based on the decision in the case of CIT Vs. Sasan Power Ltd. where it was held that interest earned on funds linked with setting up a project is a capital receipt not liable to tax. Additionally, the Jurisdictional High Court of Delhi in the case of CIT Vs. Shree Ram Honda Power Equipment upheld the principle of netting off interest before determining business profit. The Revenue disputed the matter due to a pending SLP against the decision of the Jurisdictional High Court in the case of Sasan Power Ltd. Issue 2: Applicability of the decisions in the cases of CIT Vs. Sasan Power Ltd. and CIT Vs. Shree Ram Honda Power Equipment The ITAT upheld the decision of the CIT(A) based on the binding nature of the decisions of the Hon'ble Jurisdictional High Court in the cases of CIT Vs. Sasan Power Ltd. and CIT Vs. Shree Ram Honda Power Equipment. The Revenue's challenge through an SLP did not affect the applicability of these decisions to the case at hand. The ITAT emphasized that until the decisions are modified or reversed by the High Court, they remain binding on all authorities within its jurisdiction. Therefore, the ITAT dismissed the Revenue's appeal, affirming the decision of the CIT(A) to allow netting off of interest before determining business profit. In conclusion, the ITAT upheld the decision of the CIT(A) regarding the disallowance of interest earned on margin money with interest payable on term loans, citing relevant case law and emphasizing the binding nature of the decisions of the Jurisdictional High Court. The Revenue's appeal was dismissed, and the decision was pronounced on 26th July 2013.
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