TMI Blog1992 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case while restoring the issue to the Income-tax Officer relating to the determination of the chargeable head of the interest accrued on fixed deposits, the Tribunal was justified in law in observing that the earning of interest on the fixed deposits could not be isolated from paying of interest by the assessee on the deposits received from the public ? 3. If the answer to question No. 2 above is in the affirmative, then whether the Tribunal was correct in law to hold that the interest accrued on fixed deposits should be assessed under the head 'Business income' ?" This reference relates to the income-tax assessment of the assessee-company for the financial year ending on March 31, 1972, being the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer was later confirmed on appeal by the Commissioner of Income-tax (Appeals). The assessee filed second appeal to the Income-tax Appellate Tribunal. It was submitted before the Tribunal on behalf of the assessee that it was using the word "Oberoi" in terms of the resolution passed on August 11, 1970. But no payment of royalty could be made without the approval of the Industrial Finance Corporation of India from whom the assessee-company had borrowed certain funds. The formal agreement for payment of royalty to Oberoi Hotels (India) Pvt. Ltd. could be executed only on June 15, 1972, after obtaining the approval of the Industrial Finance Corporation of India through its letter dated May 18, 1972. The Tribunal noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The liability for payment of expenditure by way of royalty arose as a result of the agreement executed on June 15, 1972. This can lawfully be claimed as a business expenditure only in the previous year commencing on April 1, 1972, and ending on March 31, 1973. The publication of the Institute of Chartered Accountants of India titled "Contingencies and events occurring after the balance-sheet date" has nothing to do with the issue involved in this reference. Since the agreement between the assessee-company and Oberoi Hotels (India) Pvt. Ltd., under which the liability to pay royalty arose could not have been admittedly executed without the approval of the Industrial Finance Corporation of India from whom the assessee-company had borrowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not be utilised for any purpose other than for the repayment of deposits maturing during the year referred to in that sub-rule. It was contended on behalf of the assessee-company before the Tribunal that the interest payable by the assessee-company on the deposits accepted from the public under the Companies (Acceptance of Deposits) Rules, 1975, have been allowed as business expenditure. The Tribunal noted that full facts were available from the order of the authorities below and, there fore, it was not in a position to finally decide the issue. The Tribunal observed that, if the facts as, stated by the assessee-company were correct, the earning of income by way of interest on fixed deposits made by the assessee-company pursuant to rule 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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