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TMI Blog2014 (4) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... est received is “inextricably linked’ with the construction of the power project, in as much as the loan was utilized to make advances linked to the expansion - The margin money from which the interest was earned was placed for the purpose of taking the loan - The loan was given for the purpose of expansion – Relying upon CIT vs. Bokaro Steels Ltd. [1998 (12) TMI 4 - SUPREME Court] - the Tribunal’ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s i.e. interest earned from the margin money deposited with the bank which has financed the assessee s expansion project to set-up another boiler plant. The assessee s appeal to the CIT (Appeal) was accepted. The CIT (Appeals) stated as follows: - 4.1 I have carefully considered the submissions made by ld.AR and have gone through the assessment order. It is seen that similar issue was decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consonance with Bokaro Steel Ltd. (supra), Kamal Cooperative Sugar Mill (supra), CIT vs. Kanataka Power Corporation . 247 1.T.R. 268(SC) and Bongaigaon Refinery and Petro Chemical Co. Ltd. vs. CIT , 251 1. T. R. 329(SC), wherein also, it has been laid down that any receipt inextricably linked to the setting up of the project is capital ' receipt not liable to tax and going to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts from business income for determining the business profit, the net interest has to be excluded and not the gross receipts. In other words, the principle of netting of has been upheld by the Hon'ble High Court of Delhi. In view of the aforesaid decision of the Hon'ble High Court of Delhi, the AO is directed to allow the netting off of interest before determining the business profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital temporarily placed in fixed deposit is in the nature of capital receipt. This Court has considered the submissions. There is no doubt that the interest received in this case is inextricably linked with the construction of the power project, in as much as the loan was utilised to make advances linked to the expansion. The margin money from which the interest was earned was placed f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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