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TMI Blog2024 (9) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... ee read as under : "The ld.CIT(A) erred in holding that interest income earned funds borrowed for project shall not be taxed without appreciating the decision of Hon'ble Supreme Court in case of Tuticorin Alkali Chemicals Ltd., in which it is held that netting off interest is not allowable and giving relief to assessee." 2.1 The appeal filed by the Revenue is barred by limitation by 6 days. It has moved a condonation petition explaining reasons thereof. We have heard both the parties on this preliminary issue. Having considered the reasons given in the petition, we condone the delay and admit the appeal for hearing. 3. The brief facts of the case are that the assessee is a limited company, filed its return of income for A.Y. 2014-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Fixed deposits kept in bank and set off Rs. 9,66,36,005/- interest payable to banks u/s 57. In the course of assessment proceedings the assessee is requested to explain [the setting of interest received against the interest paid under section 57 of the Act. The assessee replied as under: "With regards to reasons asked for deductions claimed u/s 57(iii), we wish to submit that we are setting up state of the art Power generation plant at Visakhapatnam, A P. The total cost of out project would run in to thousands of crores and a part of these costs of the Project is being met through borrowed funds from various financial institutions. Also as the project is a mega power project and involves complex engineering, planning, execution, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee submitted that the interest received on fixed deposit is offered to tax under the head income from other sources and interest paid on the borrowing utilization for keeping the fixed deposit, is set off under Section 57 of the Act against the interest received. The AO was not convinced with the submissions of the assessee and had disallowed the expenditure i.e. interest set off be payable to the bank amounting to Rs. 9,66,36,005/-. He relied upon the case of assessee's own case passed by the Tribunal in AY 2012-13 and 2013-14 in ITA Nos.1263 & 1264/Hyd/2018 dt. 18.02.2021. 8. We have heard the rival submissions and perused the material on record. The issue to be decided in the present case is whether the interest paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting up of the plant and machinery. In this view of the matter the ratio laid down by this court in Tuticorin Alkali Chemicals and Fertilizers Limited v. CIT , will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT v. Bokaro Steel Ltd. The appeal is dismissed. There will be no order as to costs." 9. In light of the above, we are of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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