9911796707
TMI Blog2016 (6) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has preferred the present Tax Appeals. 2. These appeals were admitted for consideration of the following substantial question of law: "Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that interest income earned on the amount of deposit kept with the bank for the purpose of opening of Letter of Credit (LC) used for the purchase of Plant & Machinery would be taxable as 'income from other sources' and the same shall not got to reduce the preoperative expenses or the fixed assets of the appellant? " 3. The assessee is engaged in the process of establishing project to manufacture Cold Rolled Steel Sheets and Coils. The Assessing Officer was of the view that since the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in [2001] 118 Taxman 489 (SC), wherein the Apex Court has held that in a case where the deposit of money is directly linked with the purchase of plant and machinery, any income earned on such deposit was incidental to the acquisition of assets for the setting up of the plant and machinery and thus the interest is a capital receipt which would go to reduce the cost of asset. 6. Mr. Nitin Mehta, learned advocate appearing for the revenue has supported the impugned order and submitted that the Tribunal is justified in holding that the CIT(A) is not justified in his action in deleting the addition of interest income. He submitted that the assessee has failed to establish that the interest so earned was out of the deployment of funds and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. There will be no order as to costs. " 8. The Tribunal had relied upon the decision in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd vs. CIT reported in [1997] 227 ITR 172. The Apex Court in the aforesaid decision has also considered the said decision and held that the said decision will not be attracted. The Apex Court has observed that in a case where the deposit of money is directly linked with the purchase of plant and machinery, any income earned on such deposit was incidental to the acquisition of assets for the setting up of the plant and machinery and thus the interest is a capital receipt which would go to reduce the cost of asset. Therefore, the interest income in the present case must be viewed as capital r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
