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2021 (3) TMI 554 - AT - Income TaxChargebility of interest income - investment on FDR - allowable business income OR income from other sources. - deposit of fixed deposit receipts with the government - HELD THAT:- Admittedly the assessee is a contractor working for the various government department and for the purpose of getting the contract from them it is essential for the assessee to give bank guarantee and the bank guarantee are issued by the banks on the deposit of like amount in the form of fixed deposit. The assessee in the submissions before the lower authority had categorically mentioned that due to shortage of funds, the assessee has to submit B/G in favour of various departments and as per norms of the bank, the assessee has to provide 25% cash margin in the shape of FDRS. FDRs have been prepared as per terms of contract and terms of bank guarantee and these are not investment, but are in the shape of security deposit as per terms and condition of the contract. The assessee accordingly credited investment on FDRs in their books of account as business income. The above receipts are part of contract receipt. Deposit of fixed deposit receipts with the government are essential for providing the contract in favour of the assessee. In the absence of fixed deposits, the assessee would not be able to fulfill the conditions of the contract and the contract could not be awarded to the assessee. In view of the terms of contract, the fixed deposit and earning of interest on such fixed deposit was intricately connected with the business of the assessee and there is a direct and clear nexus with the business of the assessee and the interest earned on fixed deposits, in our considered opinion, is required to be considered as business income. Income from insurance claim - amount as already included in profit and loss account and subjected to assessment u/s 143(3) already - HELD THAT:- On this aspect there was no argument before the ld. CIT(A) and as such there was no occasion for the Commissioner (Appeal) to examine the submission of the assessee. As recorded above none appeared on behalf of the assessee during the course of appellate proceedings before us, as the authorised representative had passed away. In view of the above we are of the opinion that the ground raised in the present appeal is required to be remanded back to the file of the Commissioner (appeals) for fresh adjudication. The Commissioner (appeals) is directed to decide the issue after issuing notice to the assessee and granting the opportunity of hearing to the assessee in accordance with law.
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