TMI Blog2007 (1) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal being ITA No. 497(Coch.)/2006, the assessee has challenged the separate order of CIT (Appeals) dated 27-7-2006. All these appeals relate to assessment years 1995-96, 1996-97, 1997-98, 1998-99 and 2001-02 respectively. The facts as well as issues are identical in all the appeals. Hence, these appeals are disposed of by this common order for the sake of convenience. 2. The first issue which is common in all the appeals is whether the CIT (Appeals) is justified in holding that the interest received by the assessee on the fixed deposit with the bank is to be assessed under the head "Income from other sources" and not under the head "Profits and gains of business or profession". 3. We have heard the learned counsel Shri K.M.V. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finances its associates and help them to make timely payments to their suppliers. By utilizing the at par cheque facility for effecting payments to suppliers all over India, the DD commission, the time, interest on DD, labour involvement, office work, etc. are saved and also the inefficiency of management of the associates improved. Previously the payments to suppliers were made by associate firms by DD. By the introduction of centralized management system, the activities of the individual associate concerns were also made more efficient and brought under control. By utilizing the at par facility, the payments made to suppliers, will go from bank OD account only when the cheque is presented by the suppliers at their banks. In normal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial assistance to its asso-ciates. The fixed deposits made in the bank, is a condition precedent to avail the overdraft and at par facilities, to run the business activities mentioned in the partnership deed. In view of the above nature of business activities of the assessee, the finding of the Assessing Officer and also the first appellate authority that the interest income received by the assessee on the fixed deposit is to be assessed under the head Other sources cannot be justified. The decisions relied upon by the authorities below are not applicable as the same were rendered on different set of facts relating to those cases alone. It has no application in this case. The authorities below had not considered the peculiar nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l placed before us. The assessee is engaged in the business of providing financial and management services to its associate concerns. On the perusal of the copy of partnership deed which is placed on record, we find that as per clause 4( a ) the object of the business of the firm is providing as financial and management services to the different associate concerns. As per clause 4( g ), it is provided as under : "to act as financiers of the clients in case the necessity arises." The assessee has availed the credit facility from the State Bank of India. The copy of the letter issued by the State Bank of India is placed at page 13 of the paper book. On perusal of the said letter, it is clear that State Bank of India, Chinnakada (Quilon) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of a money lending business and the interest earned by the assessee-company in the said case from amount deposited in the bank otherwise than by way of a business and hence it is to be treated as income from other sources. 7. In the case of Cochin Refineries Ltd. ( supra ), the issue was regarding the computation of deduction under section 80-I. In the case of computing the deduction under section 80-I, the Hon ble High Court has interpreted the term "attributable". In that context, it was held by the Hon ble High Court that interest earned by the assessee where the assessee is not engaged in any banking business is to be assessed under the head "Income from other sources". 8. In the case of Jose Thomas ( supra ), the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. As far as the present assessee is concerned, as per the facts, the assessee is engaged in providing financial services to its associate concerns and for that, the assessee is collecting DD commission which is saved as well as also levying service charges and this is the principal business activity of the assessee. In our opinion, the decisions relied on by the ld. DR are distinguishable on facts. Now the question is whether the assessee is engaged in banking business or money lending business. In the changing scenario of business, one cannot have restrictive interpretation to the concept of financial business. It is not disputed in this case that the associate concerns which are clients of the assessee-firm are enjoying the credit fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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