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2016 (11) TMI 1314 - HC - Income TaxInterest 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 and machinery - taxability as “income from other sources" - Held that:- In light of the direct decision of the Hon’ble Supreme Court in the case of Karnal Cooperative Sugar Mills Ltd (1999 (4) TMI 7 - SUPREME Court) wherein held held that such interest was a capital receipt which would go capital shifted, which would go to reduce cost of asset and that deposit of money was directly linked with purchase of plant and machinery and therefore, any income earned on such deposit is incidental to the acquisition of the assets for setting up of plant and machinery. Thus we are of the opinion that the learned Tribunal has committed error in holding that the interest income earned on the amount of deposit kept with the bank for the purpose of opening letter of credit used for the purpose of plant and machinery would be taxable as “income from other source”. The question of law is answered in favour of the assessee and against the revenue
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