TMI Blog2002 (12) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, a wholly owned undertaking of Punjab Government, had paid tax which was to be refunded to it as its income was exempt under section 80P(2)( a )( i ) of the Act. The Assessing Officer delayed the payment of refund. Thus interest under section 244A was allowed to the assessee. The question arose whether above interest was also to be treated as exempt under section 80P of the Act. The Assessing Officer held that above interest income was liable to be taxed under the head "other sources" and not as business income to which section 80P was applicable. Accordingly interest charged was brought to tax. 3. On appeal, the CIT(A) has passed contradictory judgments. The above interest has been treated as taxable in assessment years 1994-95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form part of the business profit and as such would qualify for deduction under section 80P(2)( a )( i ). The facts detailed above clearly show that investment in securities was made by the assessee under a statutory obligation as a part of banking business. It is also not disputed by the department that the assessee was not a banking company and in fact, the Assessing Officer has allowed deduction under section 80P(2)( a )( i ) by holding that its income was exempt. Now interest amount invested in the Government securities was out of the commercial assets of the assessee and was for purposes of banking business. It was not that the assessee had any option not to invest these funds in the form of Government securities. Thus the interest re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, though it may be paid in parts, its character would not alter by the mode or manner of repayment. When the tax was originally paid under a provisional assessment under section 14A of the Excess Profit Tax Act, it was paid out of business profits. This amount, when returned alongwith the accretions thereto, continues to bear the same character and it would be subjected to tax as business income or profits and in no other capacity. 6. The CIT(A) was not correct in treating the interest received from the income-tax department on TDS at par with the interest paid by the assessee on belated payment of tax to the income tax department. Interest paid on belated payment of tax is not considered to be a business activity or necessary part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the Hon ble Apex Court has held that the definition of business in section 2(4) was of wide amplitude and it could embrace within itself dealing in real property as also the activity of taking a property on lease, setting up a market thereon and letting out shops and stalls in the market. The Hon ble Supreme Court has also held that the residuary head of income can be resorted to only if none of the specific heads is applicable to the income in question; it comes into operation only after the preceding heads are excluded. In the case of CIT v. Triputy Woollen Mills [1992] 193 ITR 252, the Hon ble High Court has held that interest earned by utilisation of business funds was assessable as business income because it arose from utilisat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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