The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that interest earned on deposits kept for the purpose of business could not be taxed under income from other sources.
The Appeal was filed by the revenue against the order of assessment passed under Section 143(3) of the Income-tax Act, 1961 for assessee Bokaro Power Supply Company Pvt. Ltd .In this case the revenue raised the following issue that whether the lCIT (A) was justified in treating the interest earned on margin money deposits and advances amounting to Rs. 79.14 lacs to be reduced from Expenditure during Construction Period in the facts and circumstances of the case.
During the adjudication the tribunal observed that the issue in dispute is squarely covered in favor of the assessee by the order of this Tribunal in assessee‟s own case for the Asst Year 2009-10.
Further the similar issue was subject matter of NTPC SAIL Power Company Pvt Ltd Vs. CIT wherein it was held that once the interest earned on deposits kept for the purpose of business and when it is inextricably linked with the business project which is yet to be commissioned, then the entire interest income would only go to reduce the cost of the project and cannot be taxed separately as income from other sources.
Respectfully following the aforesaid judicial precedents the two-member bench Of M. Balaganesh ( Accountant Member ) and C. N. Prasad, ( Judicial Member ) dismissed the appeal filed by the revenue.
M. P. Rastogi, counsel appeared for the revenue and Kanv Bali, counsel appeared for revenue.
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