TMI Blog1995 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was established with the main object of manufacture and sale of steel castings. For the assessment year 1979-80, corresponding to the previous year ended May 31, 1978, the assessee had shown "Interest received" as Rs. 34,713. This amount consisted of three items ; the first being a sum of Rs. 10,394 which represents refund of excess payment of interest to the Industrial Finance Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that interest received on deposits in bank could not be brought to tax as income under the head 'Other sources' ? " Learned counsel for the applicant submitted that the Appellate Tribunal had followed the decision of a Special Bench of the Income-tax Appellate Tribunal, Hyderabad, in Nagarju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The first is that there was no investigation as to the question of the source of funds, which were used for giving margin money for obtaining bank guarantee. More significantly in the decision of this court in CIT v. Derco Cooling Coils Ltd. [1992] 198 ITR 375, the accounting standards explained in the booklet "A Study on, Expenditure during Construction Period", were approved. The summary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the two transactions giving rise to the receipt and expenditure which can be setoff for taking the net amount either for capitalisation or even for treatment as "deferred revenue expenditure". It was by applying this principle to the facts of that case, where the amount of interest earned was on share capital amount and the expenditure incurred was in respect of borrowed capital, that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received on margin money paid for obtaining the bank guarantee and assessing it as separate income under section 56 of the Act. We, therefore, agree with the view of the Appellate Tribunal that the income derived on the margin money for obtaining the bank guarantee cannot be separately assessed under section 56 of the Act. The question referred is, therefore, answered accordingly in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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