TMI Blog1999 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... edings for asst. yr. 1989-90, the AO noted that assessee earned interest income by way of investing the amount in FDRs, in securities, etc. and shown this income as income from business and accordingly availed the deduction under s. 32AB of the IT Act. Objection of the assessee, was sought by the AO and after considering the reply of the assessee, the AO was not satisfied. Accordingly he treated the income earned as interest on these accounts as income from other sources and negatived the claim of deduction under s. 32AB. Similar decision was taken by the AO relevant to asst. yr. 1990-91. The assessee preferred appeal before the CIT(A) who examined the issue in detail and then allowed the appeal of the assessee by holding that the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom business. In regard to reliance made by the learned Departmental Representative on (1999) 240 ITR 24 (Mad), it was stated that the facts of this case are entirely different and, therefore, this case law is not applicable on the facts of the present case. 5. We have heard the rival submissions and considered them carefully. We have also perused the case laws as relied upon by both the parties. After considering the material on record and considering the ratios of various case laws as relied upon by both the parties and also by the CIT(A), we find that there is no infirmity in the orders of the CIT(A). The CIT(A) has discussed the issue in detail and then came to a conclusion that the income shown by the assessee is income from business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner, Ministry of Textiles, Government of India, Bombay, granted approval for setting up a new unit of manufacturing spun yarn at Sahibabad for existing factory premises and the money kept in short-term with the bank was substantially withdrawn and utilised for the purposes of extension of business. Therefore, the income earned on these investments is to be treated as income from business and not from the other sources of income. These contentions of the learned authorised representative were considered by the CIT(A) with a deep thought and after application of mind then the CIT(A) came to the conclusion that these incomes are part of the business income. While doing so the CIT(A) has considered numerous decisions of the apex Court as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that it is taxed under a different section will make no difference. The approach to the problem has, therefore, to be disassociated from the section under which the tax is imposed on the form of income." 7. The CIT(A) also considered the ratio of cases in CIT vs. Motilal Hira Bhai Spg. Wvg. Co. Ltd. (1978) 113 ITR 175 (Guj), Andhra Pradesh State Financial Corpn. Ltd. vs. CIT (1985) 44 CTR (AP) 1 : (1984) 150 ITR 533 (AP), CIT vs. Paramount Premises (P) Ltd. (1991) 190 ITR 259 (Bom), CIT vs. Tirupati Woollen Mills Ltd. (1992) 193 ITR 252 (Cal), (1970) 77 ITR 139 (sic), CIT vs. Bhavnagar Trust Corpn. (P) Ltd. (1968) 69 ITR 278 (Guj) and after considering the ratio of the decisions reported in these ITRs, then CIT(A) drew an inference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "In CIT vs. Rajasthan Land Development Corporation (1995) 125 CTR (Raj) 261 : (1995) 211 ITR 597 (Raj), The Rajasthan High Court while considering the provisions of ss. 28 and 56 of the IT Act, 1961, held (i) interest on fixed deposits and other deposits before the commencement of business is an income from other sources; (ii) income from interest on deposits of surplus money during the construction period is also to be considered as income from other sources; (iii) interest income in respect of surplus money, not required for business and deposited in banks, or with persons as idle money, for safe keeping, would be assessable as income from other sources; if the income from interest is form a fund which has been brought as surplus c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also by the resolution of the board of directors who carries on the business of money-lending. 10. Here in the present case, we found that the assessee s intention was a bona fide intention and the surplus money which was earned from the business income and was lying idle where no income was earned out of the idle income then assessee made a fixed deposit with the bank and when the assessee succeeded in obtaining the licence from the Government of India for new unit for the manufacturing of spun yarn from cotton in the existing factory premises, then, he encashed the FDRs and utilised for the purpose of expanding the business. From the activities of the assessee it could be inferred easily that money lying idle was deposited in the FDRs w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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