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2010 (4) TMI 1147 - HC - Income TaxInterest received on FD - Whether the tribunal was right in treating the interest as an income from other sources? - Held that:- It is not in dispute that the appellant is a 100% Export Oriented Unit which is engaged in export of processed gherkins and during the course of its business it would have to make certain deposits for the purpose of obtaining letter in credit or for bank guarantee when the products which are processed by it have to be exported. In terms of the said letter of credit or bank guarantee, certain deposits are made and such deposits are to be treated as margin amounts and any interest which is earned out of the said deposits has to be treated as business income and not as income earned from other sources As in the case of Satishchandra and Co. V. commissioner of Income Tax [1998 (7) TMI 73 - KARNATAKA High Court] it has been held that merely because the Assessee has shown any income by way of interest, it would not become income from other sources as it has to be seen as to whether the said interest was earned out of business compulsion and as a business income. When in the said case, the Assessee has made deposit in a bank as a condition for obtaining bank guarantee to be given before the Excise Authorities as required under the Excise Rules the interest income which arose out of such transaction was held to be closely connected with the business of the Assessee and hence business income. If the income is assessable as business income then the mere circumstance that the Assessee has shown it has income from other sources or that it was assessed under the head income from other sources would not be the ground to deny the Assessee the set off of the carried forward losses. The said decision is also relevant keeping in mind the facts of the present case where the Assessee being an Export Oriented Unit had deposited the said found as margin money for the purpose of carrying on its export business. Decided in favour of the Assessee and against the Revenue
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