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1 - 10 of 16 (0.68 seconds)Challapalli Sugar Ltd vs The Commissioner Of Income Tax, A.P. ... on 31 October, 1974
Neither the accountancy principle laid down by the Institute of Chartered Accountants of India nor the reasoning contained in the decision of Supreme Court in Challapalli Sugars vs. CIT (1975) 98 ITR 167 (SC) and of this Court in Nagarjuna Steels case (supra) would merit the acceptance of the assessees contention in this behalf.... However, in our view, the last sentence in paragraph 8.2 shall not be read in isolation but in the context of and in conjunction with the preceding sentences. If so read, it is doubtful whether the Research Committee of the Chartered Accountants of India meant to lay down a broad proposition that every receipt of interest during the pre-production period should be linked with interest payment so as to be reflected in the actual capital cost of the assets. The above passage at paragraph 8.2 can be better understood by referring to the Summary of Conclusions recorded at paragraph 17.11 of the same booklet which reads as follows :
Section 56 in The Income Tax Act, 1961 [Entire Act]
Section 10 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax vs Derco Cooling Coils Ltd. on 28 June, 1991
In CIT vs. Derco Cooling Coils Ltd., (supra) the question was whether amounts received by way of interest from share capital money deposited in bank which may or may not be utilised for the purpose of setting up of the plant can be capitalised. This again emphasises that the interest incurred during the pre-production period so that one could be set off against the other.
Commissioner Of Income-Tax vs Nagarjuna Steels Ltd. on 18 November, 1987
In CIT vs. Nagarjuna Steels Ltd. (1988) 171 ITR 663 (AP), the question that arose before the Andhra Pradesh High Court was whether the bank interest received during the stage of construction of the factory on account of depositing a part of the borrowed money in the bank should be treated as "Income from other sources" or whether it should go towards reducing the actual capital cost of the assets. In the said case the company was incorporated for setting up a plant and for manufacturing certain products and for dealing in them. During the relevant accounting year, it was in the course of setting up the plant. For that purpose it had borrowed certain amounts upon which it was paying interest. All the amount borrowed was not needed at once. A portion of the said amount was kept in deposit until needed. Those deposits earned some interest. The question was whether it should be treated as "income from other sources" or actual cost. The Andhra Pradesh High Court held that interest paid by the assessee on the loans and the interest earned by the assessee on those loans should constitute one single account and, therefore, the interest received should be set off against the interest payment and the balance should be considered for capitalisation purpose and accordingly interest received on account of deposit of borrowed funds was held to be not an "Income from other sources".
Section 57 in The Income Tax Act, 1961 [Entire Act]
The Income Tax Act, 1961
Section 10 in Income Tax Rules, 1962 [Entire Act]
Commissioner Of Income-Tax vs Tamil Nadu Small Industries ... on 29 November, 1990
In a recent case in CIT vs. Tamil Nadu Industrial Development Corporation Ltd. (1991) 189 ITR 670 (Mad), the Madras High Court held that the interest received on short-term bank deposits is assessable as income from other sources. In the said case it was held that interest paid on money borrowed but not immediately used for business was not business expenditure. Such interest could not be adjusted against interest received when such money was invested in short-term bank deposits. The interest received on short-term bank deposits was assessable as income from other sources. The apex Court refused special leave on appeal. [(1991) 187 ITR (St) 41].