TMI Blog2008 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... for availing the credit facility of installation of machinery. In view of the decisions of the Supreme Court of CIT vs. Karnal Co-operative Sugar Mills Ltd [ 1999 (4) TMI 7 - SC ORDER] and Toyo Engg. India Ltd. vs. Jt. CIT[ 2005 (9) TMI 237 - ITAT BOMBAY-J] , it is clear position of law that when TDS is made on a particular income which is otherwise not liable for tax, the assessee is entitled for the said credit of the TDS. In the case in hand when the assessee has earned interest on deposit mandatory for acquisition on installation of machinery then the interest was earned by the assessee and is directly incidental to the acquisition in respect of machinery and therefore the same has been rightly reduced from the cost of the machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the previous year relevant to the assessment year under consideration from the deposits kept with the banks which had been lodged with IREDA. The assessee worked out book profit tax of Rs. 98,295 and after adjusting a portion of the TDS towards this income it had claimed a refund of the above said amount. The return was processed under s. 143(1). The AO has not given credit to the TDS and raised demand of Rs. 11,360 inclusive of interest charged under s. 234C on the net book profit tax of Rs. 98,295. 3. Aggrieved by the assessment order the assessee preferred an appeal before the CIT(A) which was dismissed vide the impugned order. Aggrieved by the order of the CIT(A) the assessee has filed the present appeal before us. 4. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for availing the credit facility of installation of machinery. In the case of CIT vs. Karnal Co-operative Sugar Mills Ltd., the Hon'ble Supreme Court has held: "In the present case, the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of the assessee's agreement with the supplier. It was on the money so deposited that some interest had been earned. This was, therefore, not a case where any surplus share capital money which was lying idle had been deposited in the bank for the purpose of earning interest. The deposit of money in present case was directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit was incid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Toyo Engg. India Ltd. vs. Jt. CIT, the Mumbai Benches of this Tribunal has held: "The expression 'income' includes not merely what is received or what comes in by exploiting use of a property but also what one saves by using it by oneself and also which can be converted into income. Likewise, the nexus between the deduction of tax at source and the assessable income is not apparent in every assessment year. Every amount from which TDS is made does not constitute income..........TDS is basically a machinery provision for collecting tax on the potential income of the assessee. There is no such conclusive presumption that tax is invariably deducted always out of income, that is why the expression 'tax deducted at source' has been use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit mandatory for acquisition on installation of machinery then the interest was earned by the assessee and is directly incidental to the acquisition in respect of machinery and therefore the same has been rightly reduced from the cost of the machinery. In this way the assessee has indirectly disclosed income and has offered for assessment. We are of the considered view that even if the income earned by the assessee has not been offered for tax being not liable for tax, the assessee is entitled for credit of TDS made in respect of that income. Accordingly, we set aside the orders of the lower authorities and hold that the assessee is entitled for credit of TDS relating to interest income of Rs. 51,21,287. 11. As regards interest levied un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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