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2018 (6) TMI 1401 - HC - Income TaxInterest income earned on bank deposits - Income made out of share capital received from the Reserve Bank of India - to be taxed as “Income from Other Sources” - or to be reduced from the capital cost of the project - Tribunal following the decision of‘Commissioner of Income Tax Bihar – II, Patna Vs. Bokaro Steel Limited’[1998 (12) TMI 4 - SUPREME COURT] which distinguished the earlier view of ‘Tuticorin Alkali Chemicals & Fertilizers Vs. Commissioner of Income Tax’ [1997 (7) TMI 4 - SUPREME COURT] and held that the interest income earned by the Assessee-Company on bank deposits made out of share capital received by it from the Reserve Bank of India could not be taxed as “Income from Other Sources” as the said interest income was earned prior to commencement of operations of the company during the construction period. Also in the case of ‘Commissioner of Income Tax v. Karnataka Urban Infrastructure and Development and Finance Corporation [2006 (2) TMI 114 - KARNATAKA HIGH COURT] held that such interest income would go to reduce the capital cost of the project and is on the capital account and the same cannot be taxed during the relevant year in which such interest income is earned. Held tht:- No substantial question of law arises in the present case and the Appeal filed by the Revenue is without merit and liable to be dismissed. The Appeal is accordingly dismissed. We express our concern and anguish at the tendency of the Revenue Department to file unnecessary appeals u/s. 260-A of the Act even though the issues are ex facie covered by the decision of the jurisdictional High Courts or even the Hon’ble Supreme Court of India. The substantial question of law essentially means that a question of law which is not already settled by the Constitutional Courts can only fall within the ambit of Section 260-A of the Act and therefore repetitive filing of such appeals by the Tax Department who are expected to be serious and bonafide litigants in the Constitutional Courts is a matter of concern. It is expected of the concerned Authorities who approve filing of such appeals u/s. 260-A of the Act, to bonafide apply their mind to such aspects of the matter and only after recording appropriate reasons for need to file such appeals and need to get substantial question of law genuinely arising from the Order of the Tribunal determined by Constitutional Courts
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