2010 (10) TMI 385

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.... Adarsh Kumar Goel, J. - This appeal has been preferred by the revenue under section 260-A of the Income-tax Act, 1961 (for short, "the Act") against the order dated 7-1-2004 of the Income-tax Appellate Tribunal, Chandigarh in I.T.A. No. 452/Chd. /99 for the assessment year 1996-97 proposing to raise following substantial question of law:-  "(i)  Whether on the facts and circumstan....

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....me by the assessee. On appeal, the CIT(A) upheld the plea of the assessee which has been affirmed by the Tribunal. The Tribunal observed:- "31. In the instant case, the uncontroverted facts before us are that the assessee in the process of setting up its industrial unit for manufacture of yarn had to import the machinery. There was an agreement between the assessee and the suppliers of the impo....

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....nly with a purpose to execute assessee deposited the money only with a purpose to execute an agreement for the purchase of the machinery and so the deposits were directly relatable to the acquisition of the asset and hence there was a direct nexus between the purchase of machinery and the deposit of money in the bank. So, for acquiring the machinery for the purpose of setting up the industrial uni....

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....x Court (supra), the deposit of money in the instant case of the assessee intrinsically linked with the purchase of machinery and so the interest was the capital receipt which would go to reduce the cost of machinery required to be purchased by the assessee. Hence, the order of the CIT(A) being in conformity with the decision of the Apex Court (supra), in which even the facts of the case of Tutico....