TMI Blog2016 (4) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... ken the view that where deposit of margin money by an assessee with a bank was linked with the furnishing of bank guarantee to be given to the Department of Telecommunications, for obtaining a licence by an assessee who was in the business of telecommunication, the same has to be treated as business income. In the case of Commissioner Of Income-Tax v. Lok Holdings [ 2008 (1) TMI 365 - BOMBAY HIGH COURT] held that money received by a property developer from prospective purchases during the progress of construction and where such funds were deposited by an assessee with the bank, interest earned on such deposits was held to have arisen out of business activity and, therefore, the same had to be construed as income from business. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as declared in the return ₹ 2,41,90,237/- Less: Income for separate consideration Interest on bank FDs ₹ 87,54,636/- ₹ 1,54,35,601/- Add: Legal expenses as discussed above ₹ 61,00,500/- Income from business ₹ 2,15,36,101/- Less:Brought forward business losses ₹ 2,15,36,101/- Net Business Income Nil Income from other sources ₹ 87,54,636/- Total Income ₹ 87,54,636//- 4. The assessee submitted before CIT(A) that it has to maintain fixed deposits with the banks and those fixed deposits were given as security for the overdraft facility utilized by the Assessee for the purpose of its business. Hence, the income is inextricably connected with the business of the Assessee. The Assessee placed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits constitutes business income. In the present case, the appellant company has made Fixed Deposits which have been used for bank overdraft facilities for running various business activities. The decision of the Hon'ble Karnataka High Court in Chinna Nachimuttha Constructions (supra) is squarely applicable to the facts of the case. Accordingly, the A.O. is directed to treat the interest income of ₹ 87,54,636/- as business income instead of income from other sources after necessary verifications. For statistical purpose, this ground of appeal is allowed. 6. Aggrieved by the order of CIT(A) the revenue has preferred the present appeal before the Tribunal. 7. The learned DR submitted before us that the CIT(A) has placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing of bank guarantee to be given to the Department of Telecommunications, for obtaining a licence by an assessee who was in the business of telecommunication, the same has to be treated as business income. In the case of Commissioner Of Income-Tax v. Lok Holdings (supra) the Hon'ble Bombay High Court has taken the view that money received by a property developer from prospective purchases during the progress of construction and where such funds were deposited by an assessee with the bank, interest earned on such deposits was held to have arisen out of business activity and, therefore, the same had to be construed as income from business. In view of the above, we are of the view that the order of CIT(A) holding that the interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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