TMI Blog2011 (11) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... onding interest expenditure that has been "laid out" to earn such income from other sources. Further, interest earned on fixed deposits for the purposes of availing of credit facilities from the bank, does not have an immediate nexus with the export business and therefore has to necessarily be treated as income from other sources and not business income - This receipt merits separate treatment under section 56 which is outside the ring of profit and gains from business and profession. It goes entirely out of the reckoning for the purposes of section 80HHC - Decided in favour of the Revenue. - IT APPEAL NO. 300 OF 2002 - - - Dated:- 18-11-2011 - SANJIV KHANNA AND R.V. EASWAR, JJ. Sanjeev Sabharwal for the Appellant. JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as business income. 4. The assessee succeeded in the first appeal and it was held that interest income as well as rent received had to be computed and included for purposes of claiming deduction under Section 80HHC. 5. The Revenue preferred further appeal, which has been dismissed by the impugned order passed by the tribunal dated 8.4.2002, inter alia, recording as under : "9. We have examined the rival submissions. The company had completed construction of the factory building in 1983. Due to sluggish market condition some of the factory's space became surplus. In order to exploit the same commercially and to prevent deterioration by complete non usage of a part of the industrial space was let out temporarily. There was no i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue's first ground of appeal." 6. We have heard Mr. Sanjeev Sabharwal, ld. sr. standing counsel for the appellant-revenue. There is no appearance on the part of the respondent-assessee. 7. Rent received is specifically taxable under the head 'income from house property'. This is a specific heading for taxation of the rental income. It is not disputed and denied that the respondent-assessee had rented out the factory building. It is not material and relevant whether the factory building was a business asset or there was no intention to part or sell the same. There can be a number of reasons as to why an assessee is not able to use an immovable property and has to rent it out to the tenant and earn income. In the present case, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermining the taxable income be shown under the head "interest on securities" under section 8 read with section 6(ii) of the Act. Similarly, dividends from shares will be shown under section I2(1A) and not under section 10. If an assessee carries on business of purchasing and selling buildings, the profits and gains earned by transactions in buildings will be shown under section 10, but income received from the buildings so long as they are owned by the assessee will be shown under section 9 read with section 6(iii). Income earned by an assessee carrying on business will in each case be broken up, and taxable income under the head "profits and gains of business" will be that amount alone which is earned in the business, and does not fall u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plus funds are parked with the bank and interest is earned thereon it can only be categorised as income from other sources. This receipt merits separate treatment under section 56 of the Act which is outside the ring of profit and gains from business and profession. It goes entirely out of the reckoning for the purposes of section 80HHC. To give effect to this position, the Assessing Officer while computing profits of the export business will have to remove from the debit side of the profit and loss account the corresponding interest expenditure that has been "laid out" to earn such income from other sources. Otherwise this will depress the profits by an amount which is out of the reckoning of section 80HHC, a consequence not intended to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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