COMMISSIONER OF INCOME TAX Vs. ARIHANT THREADS LTD.

JUDGEMENT

(1.) THIS appeal has been preferred by the Revenue under s. 260A of the IT Act, 1961 (for short, "the Act") against the order (2004) 84 TTJ (Chd) 135 - -Ed.] for the asst. yr. 1996 -97 proposing to raise following substantial question of law :

(2.) THE assessee derived income from its business activities of manufacturing yarn. In the year in question, the assessee was in the process of setting up its industrial unit and received interest income from the fixed deposit receipts by way of margin money for import of machinery through the bank. The said interest income reduced the cost of the industrial unit. The AO taxed the same, as income from other sources, rejecting the plea of the assessee that the interest only reduced the cost of setting up the unit and was not received as income by the assessee. On appeal, the CIT(A) upheld the plea of the assessee which has been affirmed by the Tribunal. The Tribunal observed :

(3.) THE Tribunal relied upon judgment of this Court in Karnal Co -operative Sugar Mills Ltd. vs. CIT (1998) 233 ITR 531 (P&H) which was affirmed by the Hon'ble Supreme Court in CIT vs. Karnal Co -operative Sugar Mills Ltd. (2000) 161 CTR (SC) 241 : (2000) 243 ITR 2 (SC), following earlier judgment in CIT vs. Bokaro Steel Ltd. (1999) 151 CTR (SC) 276 : (1999) 236 ITR 315 (SC).