TMI Blog2010 (4) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... is earned out of the said deposits has to be treated as business income and not as income earned from other sources As in the case of Satishchandra and Co. V. commissioner of Income Tax [1998 (7) TMI 73 - KARNATAKA High Court] it has been held that merely because the Assessee has shown any income by way of interest, it would not become income from other sources as it has to be seen as to whether the said interest was earned out of business compulsion and as a business income. When in the said case, the Assessee has made deposit in a bank as a condition for obtaining bank guarantee to be given before the Excise Authorities as required under the Excise Rules the interest income which arose out of such transaction was held to be closely con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts ana circumstances of this case, the tribunal was right in treating the interest as an income from other sources? 2. The relevant facts of the case are that the appellant Assessee which is a company and a 100% export of processed gherkins having its factory near Davanagere. For the asseement year 1998-99, it filed its return of income claiming exemption under Section 10B of the Income Tax Act 1961 and the same was accepted by the Assessing Officer by intimation dated 21.10.1999. Subsequently, notice under Section 154 of the Act was issued to the appellant so as to make rectification of intimation dated 21.10.199, in fact, with regard to the nature of the source of income i.e. the interest income earned by fixed deposits and as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. He has also relied upon two decisions of this Court to contend that when on account of certain business compulsions the amount has to be kept in a fixed deposit which earns interest, then the same has to be treated as business income and not income from other sources. 5. Per contra, learned counsel for the Revenue supporting the order of the Tribunal and other authorities has submitted that no substantial question of law arises in the appeal and therefore the appeal has to be dismissed. 6. Having heard the leaned counsel on both the sides and on perusal for the material on record, it is not in dispute that the appellant is a 100% Export Oriented Unit which is engaged in export of processed gherkins and during the course of its bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Excise Rules the interest income which arose out of such transaction was held to be closely connected with the business of the Assessee and hence business income. If the income is assessable as business income then the mere circumstance that the Assessee has shown it has income from other sources or that it was assessed under the head income from other sources would not be the ground to deny the Assessee the set off of the carried forward losses. The said decision is also relevant keeping in mind the facts of the present case where the Assessee being an Export Oriented Unit had deposited the said found as margin money for the purpose of carrying on its export business. 8. Therefore the substantial questions of law raised in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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