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STEELCO GUJARAT LTD Versus INCOME TAX OFFICER

Interest income earned on the amount of deposit kept with the Bank for the purpose of opening of Letter of Credit (LC) used for the purchase of plant and machinery - taxability as “income from other sources" - Held that:- In light of the direct decision of the Hon’ble Supreme Court in the case of Karnal Cooperative Sugar Mills Ltd (1999 (4)7 - SUPREME Court) wherein held held that such interest was a capital receipt which would go capital shifted, which would go to reduce cost of asset and that .....

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er 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. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmeda .....

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preferred present Tax Appeal to consider following substantial question of law: Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that interest income earned on the amount of deposit kept with the bank for the purpose of opening Letter of Credit (LC) used for the purchase of plant and machinery would be taxable as income other source and the same shall not go to reduce the preoperative expenses or the fixed assets of the appellant ? .....

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is 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 cann .....

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oresaid addition, Revenue preferred appeal before the learned Tribunal. Before the learned Tribunal a direct decision of Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Karnal Cooperative Sugar Mills Ltd reported in (2000) 243 ITR 2(SC) was pointed out. However, considering the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Autokast Ltd reported in (2001) 241 ITR 110 (SC) by impugned judgment and order the learned Tribunal has held .....

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nd confirmed the addition made by the AO. 2.3. Feeling aggrieved and dissatisfied with 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 (supr .....

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aforesaid investment treating as income from other source, solely on the ground that the assessee cannot pray for set off of the interest and other income of the preoperative project expenses. In light of the aforesaid facts, more particularly, when the interest earned by the assessee was on the fixed deposit which was required for obtaining LC for purchase of plant and machinery, we are of the opinion that the decision of the Hon ble Supreme Court in th case of Karnal Cooperative Sugar Mills L .....

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