TMI Blog2016 (6) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting up of the plant and machinery. - Interest shall go to reduce the cost of the asset - Decided in favour of the assessee - TAX APPEAL NO. 1534 of 2007 with TAX APPEAL NO. 309 of 2008 - - - Dated:- 22-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR BANDISH SOPARKAR, ADVOCATE WITH MRS SWATI SOPARKAR, ADVOCATE FOR THE OPPONENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot reduce the same from the preoperative expenses. On appeal, the CIT (Appeals) allowed the claim of the assessee. 4. On appeal before the ITAT, by impugned order, ITAT reversed the finding of the CIT(A) and allowed the appeals filed by the revenue. Being aggrieved and dissatisfied with the impugned order passed by the ITAT, the assessee has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 5. Mr. Bandish Soparkar, learned advocate appearing for Ms. Swati Soparkar, learned advocate on behalf of the assessee submitted that the Tribunal has erred in holding that interest received on the amount of deposit kept with the bank for the purpose of opening Letter of Credit used for the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The Apex court in the case of Karnal Co-operative Sugar Mills Ltd (Supra) , has observed as under: 2. 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 has been earned. This is, therefore, not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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