Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (6) TMI 917 - AT - Income TaxTaxing interest income under the head “Income from other sources” - Nature of income - expenses attributable to exempt income or income from House Property and not to interest income - Held that:- The fact that a person carried on business does not lead to the inference that all income received by such a person is business income. The same assessee can have income which may require to be classified under more than one head. It is the manner in which the income is derived that is relevant and not merely the fact that the person is engaged in a business or in a profession. Interest received by a company which carries on business, from bank deposits and loans could only be taxable as “business income”. (ii) Interest paid on overdraft obtained for the purpose of business cannot be deducted from the interest earned on monies kept in fixed deposits as such income derived by way of interest on fixed deposits has to taxed under the head “income from other sources”. (iii) However, though the assessee may not be entitled to have interest paid by it on the overdraft to the bank, deducted from the interest received by it on the short term fixed deposits, the assessee is entitled to deduction of the same from its business income. Facts being similar, we follow the ratio laid down in the case of South Indian Shipping Corporation Ltd. [1998 (2) TMI 43 - MADRAS High Court] and hold that the AO has rightly brought to tax interest income under the head “Income from other sources”. However, the AO is directed to allow the claim of expenses of ₹ 15,56,592/- from the business income of the assessee, after verification.
|