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2018 (10) TMI 1226 - RAJASTHAN HIGH COURTNature of interest income - interest received from FDRs/NSCs - discounts received from suppliers of material - income from other sources OR busniss income - nexus with business activity - Rejection of books of accounts - Held that:- We find that appellant being a civil contractor was required to provide a performance guarantee to the various works departments for obtaining contracts of civil construction. He to keep such performance guarantee alive by way of utilizing the bank overdraft limit against which he had to furnish FDRs/NSC for execution of the contracts. His failure to submit the performance guarantee or inability to keep them alive would have resulted in termination of the contract awarded to him and in that event, the concerned departments/employer could encash the security. Release of such performance guarantee is dependent on fulfillment of certain conditions. It is not that the appellant had invested surplus money lying idle with him only in FDRs/NSCs with a view to earning interest. Obtaining of FDRs/NSCs and furnishing of the same against the performance guarantee by the appellant, therefore, had an inextricable nexus with his business of securing civil contracts and integral to his working as civil contractor. The income of interest earned from the interest such FDRs/NSCs by the appellant therefore, in our considered view, cannot be treated as income from other sources and would rather be an income earned from business. The interest income from FDRs and NSCs of the petitioner has to be treated as income from business and not income from other sources as the income is part of the total receipts and not from other sources. Matter is remitted back to the AO for passing fresh order of assessment in accordance with law keeping view the question answered by this Court in THE COMMISSIONER OF INCOME TAX VERSUS M/S BHAWAL SYNTHETICS (INDIA) UDAIPUR [2017 (5) TMI 540 - RAJASTHAN HIGH COURT]
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