TMI Blog2007 (8) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... come as business income instead of income from other sources . 3. Briefly stated, the facts of the case are that the assessee-company was incorporated with the main object of acquiring a holding of equity and preference shares of companies engaged in the business of cement, ready mix and aggregate and to provide financial management. It was the first return of the assessee-company. The Assessing Officer noted that the total capital was at Rs. 209.33 crores which was raised during this year, out of which a sum of Rs. 207.78 crores was invested in the shares of Lafarge India Ltd. The assessee-company also earned interest on fixed deposits of Rs. 2,28,000 against which, it had claimed administrative and other expenses to the tune of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested in fixed deposits on which the interest income earned would be taxable under the head Income from other sources . He has relied on several decisions in support of his case. In the opposition, the learned A.R. argued that the assessee was set up with an intention of making strategic investment in the shares of cement company. He submitted that the amount available with the assessee was put into bank for the period till such the investment was not made. As the funds belonged to the business of the assessee company, he argued that the interest was rightly held to be taxable under the head Business income . He also relied on certain decisions in support of his case. 5. We have heard the rival submissions and perused the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parking of its idle funds in the bank during the period in which they were not required to be utilized. How such interest income can be held to be falling under the head Business income is anybody s guess. The Hon ble jurisdictional High Court in the case of Shree Krishna Polyester Ltd. v. Dy. CIT [2005] 274 ITR 21 (Bom.) has laid down certain basic principles regarding the head under which interest income is to be put. It has taken assistance from the case of CIT v. Rajasthan Land Development Corpn. [1995] 211 ITR 597 (Raj.). The said principles so laid down include inter alia that the interest income in respect of surplus money, not required for business and deposited in the bank, as idle money for safe keeping would be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax under the head Business income as held by the learned CIT(A). By overturning the impugned order on this score, we restore the opinion of the Assessing Officer and hold that such interest is taxable under the head Income from other sources . This ground is allowed. 6. Ground No. 2 is against the direction of the learned CIT(A) in deleting the disallowance made by the Assessing Officer under section 14A of the Act. As we have observed above that the assessee claimed the deduction of administrative and other expenses to the tune of Rs. 2.69 crores and the Assessing Officer, after considering the provisions of section 14A, came to hold that the assessee s business activities were confined to the share investments, income from which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 28 of the paper book from which it can be seen that the assessee has not earned any dividend income. The only income is interest on fixed deposits with the bank. As against this income, the assessee had claimed expenditure of Rs. 2,69,85,000. Thus, it is seen that in the year in question there is no income of the assessee which is exempt under section 10( 33 ) of the Act. The learned A.R. has relied on the order passed by the Mumbai Bench of the Tribunal in the case of World Network Services (P.) Ltd. v. Dy. CIT [IT Appeal No. 1833 (Mum.) of 2003, dated 25-8-2006]. In this order, it has been held that unless the assessee has claimed any exemption under the specific section, the provisions of section 14A are not attracted. No contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an object of making strategic investment in the shares of companies involved in the cement business, we find that it cannot be held that the assessee is not carrying on any business. We therefore, approve the finding of the learned CIT(A) to this extent. 9. Now coming to the expenses part, the learned Assessing Officer did not grant any deduction on the ground that section 14A was attracted. We have held above that this section is not applicable to the facts of our case and the assessee was carrying on the business. In these circumstances, the natural consequence that follows is that expenses claimed by the assessee are deductible in full under the head "Profit and gains from business or profession". 10. In the result, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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