Q. Who were the advocates involved in the case Commissioner of Income Tax vs Karnal Co-Operative Sugar Mills Limited?

For the Appearing Parties R.N. Trivedi, S.D. Sharma, S.K. Dwivedi, Sunil K. Mukhi, P.C. Jain, M.S. Dahiya, Rajiv Nanda, Advocates.

Q. What are the equivalent citations for Commissioner of Income Tax vs Karnal Co-Operative Sugar Mills Limited ?

The equivalence citation are(2000) 161 CTR SC 241 ; [2001] 118 TAXMAN 489 (SC) ; [2000] 243 ITR 2 ; (2000) 9 SCC 493 ; LQ/SC/1999/470 ;

Q. What was the bench assigned for the case Commissioner of Income Tax vs Karnal Co-Operative Sugar Mills Limited?

HONBLE MR. JUSTICE R.P. SETHI, HONBLE MR. JUSTICE SUJATA V. MANOHAR

Commissioner Of Income Tax Vs. Karnal Co-Operative Sugar Mills Limited On 23 April, 1999

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Commissioner Of Income Tax v. Karnal Co-operative Sugar Mills Limited

(Supreme Court Of India)

Civil Appeal No. 2438 & 2439 Of 1999 | 23-04-1999

R.P. SETHI, J.

BY THE COURT

Leave granted.

In the present case, the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of the assessees agreement with the supplier. It was on the money so deposited that some interest has been earned. This is, therefore, not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting up of the plant and machinery. In this view of the matter the ratio laid down by this Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT 1997 SC 2601 [LQ/SC/1997/613] : 1997 SC 2601 (SC) : TC S38.3460, will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT vs. Bokaro Steel Ltd. 1998 SC 1885 : 1998 SC 1885 (SC). The appeal is dismissed. There will be no order as to costs.

Advocate List

Bench

HON'BLE MR. JUSTICE R.P. SETHI
HON'BLE MR. JUSTICE SUJATA V. MANOHAR

Eq Citations

(2000) 161 CTR SC 241
[2001] 118 TAXMAN 489 (SC)
[2000] 243 ITR 2
(2000) 9 SCC 493
LQ/SC/1999/470

Head Note

Income Tax — Interest — Interest earned on money deposited for opening letter of credit for purchase of plant and machinery — Whether taxable — Held, income earned on such deposit is incidental to acquisition of assets for setting up of plant and machinery — Hence, ratio laid down in Tuticorin Alkali Chemicals & Fertilizers Ltd., (1997) 10 SCC 613, not applicable