TMI Blog2004 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee acquired in public issue were funds acquired from the business activity and when it is not so, the interest earned thereon in short-term deposit cannot be treated as business income and has to be treated as income from other sources- Held that the income of interest earned by the assessee by investing surplus money received in public issue in bank deposits for a period of 45 days was assessable as income under the head "Income from other sources". - - - - - Dated:- 16-10-2004 - Judge(s) : R. M. LODHA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by R. M. Lodha J.-Having heard Mr. F. Irani, learned counsel for the appellant-assessee, and Mr. R. V. Desai, learned senior counsel for the Revenue, we are of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent heads as set out in section 14 of the Income-tax Act. Need we emphasise that the mode and manner in which the income is derived helps in determining under which head the income received by the assessee would fall. The facts which have been found by the Tribunal lead to the conclusion that the interest that the assessee earned from short-term investment of surplus money received in public issue did not spring or emanate from the business activity of the assessee. The interest income in respect of the surplus money not required for business immediately and deposited in banks as idle money, in our opinion, would be assessable as "income from other sources" in the facts and circumstances of the present case. The Rajasthan High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso by the resolution of the board of directors to carry on the business of money-lending or lending of money." The Madhya Pradesh High Court in the case of Madhya Pradesh State Industries Corporation Ltd. v. CIT [1968] 69 ITR 824 held that the assessee-company was not a banking company and the deposit of surplus share money in the bank and the interest earned thereon was not in the ordinary course of business and it was merely a transaction relating to its share capital and not an act in the course of business and, accordingly, the interest earned on the deposits made by the assessee cannot be regarded as income under the head "Profits and gains of business" but has to be treated as "Income from other sources". In Tuticorin Alkali Chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the Tribunal was that income from interest was in the nature of business income and did not arise out of independent activity and, accordingly this court upheld the view of the Tribunal that the interest income was business income of the assessee. Learned counsel for the appellant then contended that the surplus money from the public issue was a working capital. We are afraid this was not the case of the assessee either before the Assessing Officer or before the Commissioner of Income-tax (Appeals). It was not the case before the Income-tax Appellate Tribunal nor is it the case even in the memo of appeal before us. We notice the said contention and reject it accordingly. From what we have discussed above, in the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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