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2021 (3) TMI 476 - AT - Income TaxSetting off of Interest income with interest paid - assessee had claimed that it was setting up power project during the year under consideration and commercial production has not started till the end of ay, and hence the said interest income earned by assessee is to be set off against the interest paid by the assessee on term loan availed by it for setting up of power generation plant, which will go on to reduce cost of project - HELD THAT:- Tribunal has vide adjudicating Revenues appeal for ay: 2013-14 and 2014-15 [2021 (2) TMI 69 - ITAT ALLAHABAD] set aside and restored the matter to the file of ld. CIT(A) for fresh determination of the issue with certain directions . Thus, Respectfully following aforesaid decision of tribunal, we are setting aside the appellate order passed by ld. CIT(A) on this issue and remitting the matter back to the file of ld. CIT(A) to decide this issue afresh on merits, with the same directions as were given by us while adjudicating appeal for ay: 2013-14 and 2014-15. The ld. CIT(A) will also look into specific additional contention of ld. CIT-DR that the bank is creating bank deposits because it is assessee who has itself given standing instructions to the bank, shall also be looked into by ld. CIT(A) while adjudicating appeal denovo. Interest earned by assessee from IVRCL and M.G. Contractors for advances paid for execution of certain work - HELD THAT:- We are also restoring the matter back to the file of ld. CIT(A) with a similar direction as above to look into the terms and conditions of the contract and the deposit made by the assessee with the contractors to see that whether the said deposits were made by assessee to contractors as part of the terms and condition of the contract for construction of the assessee project and if that be so then in that case it is to be held that the interest earned by assessee from said advances to contractors for carrying on said deposits is inextricably linked with the construction activity of the assessee for setting up of the project and hence it will go on to reduce the project. Reference is made to ratio of decision of Hon’ble Supreme Court in the case of CIT v. Bokaro Steel Ltd [1998 (12) TMI 4 - SUPR EME COURT]which shall than be applicable but, If however, ld. CIT(A) after investigation of the fact is of the view that the aforesaid interest income is earned by assessee on surplus funds deployed by the assessee to earn interest income, then in that situation ratio of decision of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997 (7) TMI 4 - SUPREME COURT]shall be applicable.This issue is also allowed for statistical purposes. Nature of receipt - Forfeiture of EMD received from the contractors on account of non performance of the contract - assessee has not yet commenced commercial operations and its power plant is under construction, during the year under consideration - HELD THAT:- As decided in own case [2021 (2) TMI 69 - ITAT ALLAHABAD] we are deciding this issue in favour of the assessee and the said receipt on account of forefeiture of EMD which were given by contractors to assessee, on account of non performance of contract during the construction period of the project, are held to be capital receipt which will go on to reduce the project cost.
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