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TMI Blog2014 (8) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... that the interest income in the hands of the assessee allotted in the three years IDBI capital bonds is required to be taxed only on proportionate basis and that the Commissioner of Income Tax (Appeals) was not justified in sustaining the addition made in the year in which it was received" 2. The assessee filed the return of income for the year under consideration declaring the total income of Rs. 4,56,000/-. It appears that during the Assessment Year the assessee made the investment of Rs. 46,25,000/- in the three year IDBI Capital Bond Scheme. The assessee opted for computation of interest and received a sum of Rs. 10,86,875/- during the Assessment Year under consideration. He, however, made the claim that the total interest should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Year under consideration. Being aggrieved and dissatisfied with the impugned judgment and order passed by the tribunal, the revenue has preferred the present Tax Appeal to consider the following substantial question of law; "Whether the tax appellate tribunal is right in law and on facts in holding that the interest income in the hands of the assessee allotted in the three years IDBI capital bonds is required to be taxed only on proportionate basis and that the Commissioner of Income Tax (Appeals) was not justified in sustaining the addition made in the year in which it was received" 3. Shri Varun Patel, learned advocate appearing on behalf of the revenue has vehemently submitted that the tribunal has materially erred in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said appeal before the Hon'ble Supreme Court was arising out of the decision of the Division Bench of this Court in Tax Appeal Nos.157/2000 and 328/2000 by which the Division Bench answered the aforesaid question in favour of the revenue and against the assessee. It is submitted that the Hon'ble Supreme Court in the case of Rakesh Shantilal Mardia (Supra) has held the aforesaid issue in favour of the assessee and against the revenue. It is submitted that in the said decision the Hon'ble Supreme Court has considered and as such has approved the decision of the Bombay High Court in the case of Taparia Tools Ltd. Vs. Joint Commissioner of Income Tax reported in (2003) 260 ITR 102. It is therefore submitted that the tribunal has not committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Year in question in which the entire amount of interest was received. However, on appeal, the Hon'ble Supreme Court has reversed the said decision considering the decision of the Bombay High Court in the case of Taparia Tools Ltd. (Supra). The Hon'ble Supreme Court in the case of Rakesh Shantilal Mardia (Supra) has as such approved the decision of the Bombay High Court in the case of Taparia Tools Ltd. (Supra). In the case of Taparia Tools Ltd. (Supra) the Bombay High Court has held that the upfront one time payment of interest immediately on allotment is deferred revenue expenditure and the assessee creating asset on basis of interest for five years being paid in advance in first year and, thereafter, the assets written off over period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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