TMI Blog2010 (10) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ukhi and Ms. Jyoti for the Respondent. JUDGMENT Adarsh Kumar Goel, J. This appeal has been preferred by the revenue under section 260-A of the Income-tax Act, 1961 (for short, "the Act") against the order dated 7-1-2004 of the Income-tax Appellate Tribunal, Chandigarh in I.T.A. No. 452/Chd. /99 for the assessment year 1996-97 proposing to raise following substantial question of law:- "(i) Whether on the facts and circumstances of the case, the Hon'ble Income-tax Appellate Tribunal is justified in holding that interest received by the assessee was a capital receipt and so is required to be set off against the project development and preoperative expenses?" 2. The assessee derived income from its business activities of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of depositing the money out of the share capital was an activity incidental to the acquiring of the asset. In this case, from the facts it is clear that the assessee deposited the money only with a purpose to execute assessee deposited the money only with a purpose to execute an agreement for the purchase of the machinery and so the deposits were directly relatable to the acquisition of the asset and hence there was a direct nexus between the purchase of machinery and the deposit of money in the bank. So, for acquiring the machinery for the purpose of setting up the industrial units, the interest income earned by the assessee could definitely reduce the cost of the machinery. Now, applying the law laid down by the apex Court in its de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Karnal Cooperative Sugar Mills Ltd. v. CIT [1998] 233 ITR 531/[1999] 102 Taxman 11 which was affirmed by the Hon'ble Supreme Court in CIT v. Karnal Cooperative Sugar Mills Ltd. [2000] 243 ITR 2/[2001] 118 Taxman 489, following earlier judgment in CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315/102 Taxman 94 (SC). 4. We have heard learned counsel for the parties and perused the record. 5. It is not disputed that the deposit by the assessee and interest accrued thereon was incidental to acquisition of asset as deposit itself was made towards margin money for opening the Letter of Credit. This being the undisputed factual position the Tribunal was justified in holding that the matter is covered in favour of the assessee by judgments of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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