TMI Blog2016 (11) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... isition of the assets for setting up of plant and machinery. Thus we are of the opinion that the learned Tribunal has committed error in holding that the interest income earned on the amount of deposit kept with the bank for the purpose of opening letter of credit used for the purpose of plant and machinery would be taxable as “income from other source”. The question of law is answered in favour of the assessee and against the revenue - TAX APPEAL NO. 893 of 2006 - - - Dated:- 10-11-2016 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : MR. B.S. SOPARKAR, LD. ADV FOR MRS SWATI SOPARKAR, ADVOCATE FOR THE OPPONENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Japan. The company opened LC for import of plant and machinery from time to time. The lien was created for the equivalent amount of LC deposited in this account. The assessee company earned interest on the said deposit in foreign currency which was converted into rupees, either at the time of settlement of import transactions or on the date of balance sheet, whichever is earlier. The assessee earned interest of ₹ 25,17,666/on the aforesaid fixed deposited which was placed for opening of LC for import of plant and machinery. The assessee claimed that such interest earned was not at all taxable. As according to the assessee, the same cannot be included as income from other source. Alternatively, a request was made that interest paid o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned judgment and order passed by the learned Tribunal, the assessee has preferred present appeal to consider the aforesaid substantial question of law. 3.0. We have heard Shir B.S. Soparkar, learned advocate for the appellantassessee and Shri Nitin Mehta, learned counsel for the Revenue. We have considered and gone through the decision of the Hon'ble Supreme Court in the case of Autokast Ltd (supra) and also in the case of Karnal Cooperative Sugar Mills Ltd (supra). 4.0. At the outset, it is required to be noted and even as observed by the AO while passing the assessment order, the assessee earned the interest on the deposit which was required to be placed for opening of LC for import of plant and machinery. The AO has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case on hand. 5.0. However, so far as reliance placed upon the decision of the Hon ble Supreme Court in the case of Autokast Ltd (supra) upon which, reliance has been placed by the learned Tribunal as well as by the revenue is concerned, we are of the opinion that said decision shall not be applicable to the facts of th case on hand. In the case before the Hon ble Supreme Court, the assessee borrowed the certain amount from th IDBI and deposited the same in the banks till it was used either in purchase of plant and machinery and / or installing them or in running establishment. To that Hon ble Supreme Court has observed that AO was right in treating such interest as income of the assessee from the other source. 6.0. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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