Interest on short-term deposits for letters of credit to buy plant and machinery is incidental and a non-taxable capital receipt HC held interest earned on short-term deposit receipts, placed to facilitate letters of credit for procuring plant and machinery, is incidental to the ...
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Interest on short-term deposits for letters of credit to buy plant and machinery is incidental and a non-taxable capital receipt
HC held interest earned on short-term deposit receipts, placed to facilitate letters of credit for procuring plant and machinery, is incidental to the acquisition and constitutes a capital receipt rather than taxable income. Relying on the court's prior decision, no substantial question of law arose for the Revenue; the appeal was dismissed.
The court relied on its earlier decision dated 17th November 2021 in ITA No. 8 of 2005 (M/s. Neelachal Ispat Nigam Limited v. Assistant Commissioner of Income Tax, Circle-2(1), Bhubaneswar) and held that "no substantial question of law" as urged by the Revenue arises in the present appeal. Applying that precedent, the appeal was dismissed: "The appeal is accordingly dismissed." The order further directs that an "urgent certified copy of this order be issued as per rules." The disposition is summary, predicated on stare decisis to the cited 2021 decision, and contains no additional substantive legal analysis beyond the finding that the Revenue's grounds do not raise a substantial question of law.
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