TMI Blog2002 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... e instance of the Revenue, is as follows: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the interest income should not be excluded for the purpose of calculating the deduction under section 80HHC of the Income-tax Act, 1961?" The assessment years are 1989-90 and 1990-91. The assessee is a firm doing business in export of tanned and finished leather. It had obtained credit facilities from the overseas branch of the State Bank of India, Madras. The assessee had, in the same bank, made deposits to the tune of Rs. 139.14 lakhs, on which it received interest at the rate of 10 per cent. The assessee's claim that the interest received by it on those deposits should be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facilities enjoyed from the bank were inextricably linked. It also held that the interest received on those deposits was required to be treated as part of the income from the business for computing the relief under section 80HHC. That view of the Tribunal cannot be sustained. The Commissioner has rightly pointed out that the deposits kept by the assessee in the bank in a large sum of over Rs. 130 lakhs were to the assessee's own advantage, inasmuch as they provided a return at the rate of 10 per cent. That was in the nature of an additional source of income to the assessee which was not in any way linked to the business that it was carrying on. The credit facilities enjoyed by the assessee from the bank had been extended to it by charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a pre-condition for enjoying a facility essential for running the business, the making of the deposit would be regarded as being inextricably linked to the running of the business of the assessee, so as to enable the assessee to regard the interest derived on the deposit as being part of its business income. Learned counsel for the assessee submitted, placing reliance on certain observations made in the case of Brooke Bond and Co. Ltd. v. CIT [1986] 162 ITR 373 (SC), that even if a part of the business income is computed under a different head for the purpose of assessment, it would nevertheless retain the character of income from business and should be treated as such. Learned counsel relied on the observations of the court in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of interest from the investments in securities of the sums appropriated to the contingencies reserve as required under the provisions of the Sixth Schedule to the Electricity (Supply) Act, which was one of the conditions of the licence on the basis of which the electricity company could carry on its business. That decision is not of any assistance to the assessee here as the making of the deposit with the bank was not a statutory requirement or condition subject to which the assessee was enabled to carry on business nor was it even a condition precedent for enabling the assessee to obtain the credit facilities from the bank. The question referred to us is, therefore, answered against the assessee and in favour of the Revenue. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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