TMI Blog2018 (7) TMI 2216X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s own case, we are of the view that there is no merit in this appeal by the revenue and the same is dismissed. Interest earned from fixed deposits has to be regarded as business income on which deduction u/s. u/s.80IA[4][iv] or the same should be treated as income from other sources - HELD THAT:- This aspect was also considered by the Tribunal in assessee s own case in AY 2010-11 [ 2017 (12) TMI 1631 - ITAT BANGALORE] wherever the FDRs are purchased on account of business exigencies, the interest generated thereon would be business income and not income from other sources. But in the instant case, it is not borne out from the orders of lower authorities whether all FDRs are purchased for business exigencies or not. Therefore, we restore the matter to the file of the AO to examine the nature of FDRs and its purpose and to give a specific finding whether the FDRs were purchased for business purposes or not. If it is purchased for business purposes, the interest income earned thereon shall be treated as business income, not income from other sources. - ITA No. 533/Bang/2018 And CO No.75/Bang/2018 [in ITA No.533/Bang/2018] - - - Dated:- 6-7-2018 - Shri N.V. Vasude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. A copy of the order is placed on record. The relevant observations of the Tribunal in paras 15 to 17 are as follows:- 15. Having carefully examined the orders of authorities below in the light of rival submissions and documents placed on record, we find that there was an amendment to sub-section (2) of section 115JB by the Finance Act, 2012 w.e.f. 1.4.2013. Prior to this amendment, as per sub-section (2), every assessee being a company, shall for the purpose of this section (s. 115JB) prepare its profit loss account for the relevant previous year in accordance with the provisions of Part II III of Schedule VI to the Companies Act, 1956. Before this amendment it was not realized by the Legislature that there are certain companies who are not obliged to prepare its profit loss account for the relevant previous year in accordance with the provisions of Part II III of the Schedule VI to the Companies Act, 1956, as they were governed by different Acts/statute. It was not clear as to when these companies are not required to prepare their profit loss account in accordance with the provisions of Part II III of Schedule VI to the Companies Act, 1956, whether the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from compliance with any of the requirements in Schedule VI if, in its opinion, it is necessary to grant the exemption in the public interest. For the sake of reference, we extract the provisions of section 211 (1) to (3) hereunder:- Form and contents of balance sheet and profit and loss account. 211. (1) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the form set out in Part I of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case; and in preparing the balance sheet due regard shall be had, as far as may be, to the general instructions for preparation of balance sheet under the heading Notes at the end of that Part: Provided that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity or to any other class of company for which a form of balance sheet has been specified in or under the Act governing suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the different Benches of the Tribunal and Hon ble High Court of Kerala that assessee is governed by different Acts and Rules, who is not required to prepare its profit loss account and balance sheet as per Part II III of Schedule VI to the Companies Act, the provisions of section 115JB cannot be invoked. In the light of this legal position, we are of the view that the revenue authorities wrongly invoked the provisions of section 115JB of the Act, therefore the order of the CIT(Appeals) is not sustainable in the eyes of law. Accordingly, we set aside the order of CIT(Appeals) in this regard. 5. As far as amendment to provisions of section 115JB(2) of the Act w.e.f. 01.04.2013 is concerned, this issue has also been dealt with by the Tribunal in assessee s own case for AY 2010-11 by placing reliance on a similar decision rendered on the very same amendment to law in the case of Karnataka Power Corporation Ltd. v. ACIT (supra), wherein the Tribunal took the view that amendment to law w.e.f. 01.04.2013 was only prospective. In view of the order of Tribunal on an identical issue in assessee s own case, we are of the view that there is no merit in this appeal by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower authorities. We have, however, examined the judgments of jurisdictional High Court in the case of Chinna Nachimuthu Constructions (supra), M/s. Hajee Jaffar Shariff (supra) and the Delhi High Court judgment in the case of Jaypee DSC Ventures Ltd. (supra). In all these cases, the Hon ble High Courts have examined the judgment of the Hon ble Apex Court in the case of CIT v. Sterling Foods, 237 ITR 579 (SC) and Pandian Chemicals Ltd. v. CIT, 262 ITR 268 (SC). In the later judgment of the Hon ble Apex Court in the case of Pandian Chemicals Ltd. (supra), it was held that interest on deposits of electricity boards cannot be said to be derived from industrial undertaking being a step removed from business of industrial undertaking. Therefore, it was income from other sources. These judgments were examined by the jurisdictional High Court in the case of Chinna Nachimuthu Constructions (supra) which was delivered on 12.11.2007 in which it was held that investment of amount in fixed deposits by the assessee was only to secure a bank guarantee to be offered to M/s. KPTCL in order to acquire a contract work. Therefore, it cannot be treated as income from other sources and interest accrued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k guarantee was required for faithful performance of its obligations. The non-submission of the guarantee would have entailed in termination of the agreement and NHAI would have been at liberty to appropriate bid security. That apart, the release of such performance security depended upon certain conditions. Thus, it is clearly evincible that the bank guarantee was furnished as a condition precedent to entering the contract and further it was to be kept alive to fulfill the obligations. Quite apart from the above, the release of the same was dependent on the satisfaction of certain conditions. Thus, the present case is not one where the assessee had made the deposit of surplus money lying idle with it in order to earn interest; on the contrary, the amount of interest was earned from fixed deposits which was kept in the bank for furnishing the bank guarantee. It had an inextricable nexus with securing the contract. Therefore, we are disposed to think that the factual matrix is covered by the decisions rendered in Bokaro Steel Ltd. (supra), Karnal Co-operative Sugar Mills Ltd. (supra) and Koshika Telecom Ltd. (supra) and, accordingly, we hold that the view expressed by the tribunal c ..... 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