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2017 (11) TMI 186 - AT - Income TaxAddition of penal interest paid to Sales-tax Department - Held that:- On perusal of the clause 30(1) above, it is evident that amount paid is toward interest at the rate of 1% per month, for the period from the tax payable has become due to the date of payment or to the date of order of assessment whichever is earlier. Thus, the interest amount paid is towards delay in payment of tax, is compensatory in nature. Penalty of ₹ 5,000/- for the default under section 30(4)(d) of the Jharkhand VAT Act, 2005, has already been upheld by us as not in the nature of compensatory. Accordingly, the amount of ₹ 16,46,444.96 being compensatory in the nature, is allowable in terms of the decision of the Hon’ble Supreme Court in the case of Swadeshi Cotton Mills Ltd. Vs.CIT (1997 (5) TMI 5 - SUPREME Court). In view of above discussion, we summarise that out of amount of ₹ 86,72,759.42, amount of ₹ 70,26,314.46 is directed to be disallowed and amount of ₹ 16,46,444.96 is directed to be allowed. The ground of the appeal of the assessee is accordingly partly allowed. Disallowance of interest on account of interest expenses being of capital nature - Held that:- The interest earned on money received from share capital was temporarily placed in fixed deposits, which has been held as interest in the nature of capital receipt liable to be set off against preoperative expenses. In the instant case also identical issue of netting off of interest income earned on borrowed money deposited in banks, against the interest expenditure during construction is involved, thus, respectfully following the decision of the Tribunal in the case of Bokaro Power Supply Company Pvt. Ltd. (2015 (1) TMI 45 - ITAT DELHI) we uphold the finding of the learned CIT-(A) on the issue in dispute and accordingly, the ground No.1 of appeal of the Revenue is dismissed.
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