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TMI Blog2018 (7) TMI 1904X X X X Extracts X X X X X X X X Extracts X X X X ..... st earned is not inextricably linked to setting up of plant and machinery on the part of the Appellant-Assessee. It also records a finding that money by OFCD was not received for setting up of plant. Therefore, cannot be capitalised. We find that on the facts as found by the Authorities, the decision of the Apex Court in Bokaro Steels Ltd. [1998 (12) TMI 4 - SUPREME COURT] and Karnal Cooperative Sugar Mills Ltd. . [1999 (4) TMI 7 - SUPREME COURT] has been correctly applied. No substantial question of law Whether Tribunal is right in not adjudicating the alternate argument taken before it that the interest on Fixed Deposit kept in lien favoring trustees of debenture holders is not the income of the assessee but that of the beneficiary deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the Hon'ble Tribunal is right in not adjudicating the alternate argument taken before it that the interest on Fixed Deposit kept in lien favoring trustees of debenture holders is not the income of the assessee but that of the beneficiary debenture holders, relying on the decision of Jurisdictional Bombay High Court ? 3 Re. Question (a): (i) The AppellantAssessee is engaged in generation/manufacture of power and energy by setting up hydro power project. The Appellant had issued Optional Fully Convertible Debentures (OFCD). The amounts were deposited in Bank and earned interest thereon. The Appellant sought to capitalise the same on the ground that the same was for purposes of setting up of hydro electric power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the assessee earned the interest from the bank deposits and earning of interest was plainly not in the ordinary course of its business and that the interest earned by the assessee was rightly assessed under the head income from other sources. (emphasis supplied) (iii) Thus, we note that earning of interest was not inextricably linked with setting up of plant or any other capital expenditure was a finding of fact rendered by the Authorities under the Act. Further it was a pure case of interest on deposit in bank. Further the authorities also find as a fact that the amounts received in the form of OFCD was not received for purchase of plant and machinery but to reduce the tariff of the project. (iv) Mr. Kanth the learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on commitment advance was treated as capital expense as it was inextricably linked to the purchases/construction of power plant. So also in the case of Facor Power Ltd. (Supra) of Delhi High Court held that money to be used in purchases of plant and machinery which was temporarily placed in fixed deposit was linked to setting up of plant and thus, allowed to be capitalised. In Indian Oil Panipat Power Consortium Limited (Supra), Court held that the interest earned prior to the commencement of business on funds brought in by way of share capital for specific purposes of acquiring land was capital receipt. This was required to be set off against preoperating expenses. (v) In the decisions of the Delhi High Court in Sasan Power Ltd. (Supra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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