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TMI Blog2018 (6) TMI 1721X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest receipt of Rs..62,77,671/- is income and is to be assessed as income from other sources. 2. Brief facts of the case are that the assessee is engaged in he business of developing and maintenance of commercial complex and filed its return on 30.09.2009 declaring an income of Rs..2,98,060/-. The assessee filed a revised return on 28.09.2010. The Assessing Officer completed the assessment under section 143(3) of the Income Tax Act, 1961 ["Act" in short] assessing the total income of the assessee at Rs..65,75,730/- after bringing to tax the interest income of Rs..62,77,671/- under the head 'income from other sources'. 2.1 From the details of TDS certificates, the Assessing Officer noticed that the assessee earned interest income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Counsel for the assessee prayed for deleting the addition made and confirmed by the ld. CIT(A). 5. On the other hand, the ld. DR strongly supported the orders of authorities below besides placing heavy reliance on the decisions of the Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals Ltd. v. CIT (supra) and in the case of CIT v. Autokast Ltd. 248 ITR 110 (SC). 6. We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee was incorporated with the objective of promoting commercial buildings. Initially, an extent of 10.64 acres was taken on lease from Express Newspapers Pvt. Ltd. and subsequently surrendered on 26.03.2007. On the same day, an extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also plant and machinery on hire. From the facts of this case, it is very clear that the income earned is inextricably linked to the business of the assessee and therefore the Supreme Court held that the income received is capital in nature. It is also relevant to mention that the Supreme Court in the case of Bokaro Steel Ltd. in page no.6 also upheld the decision by the Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. 227 ITR 172. 7.3.4 Similarly, in the case of Vodafone South Ltd., referred supra, there is a clear finding that the sanction letter of lender bank HSBC permitted the assessee in that case to utilize the borrowed sum to advance loans to others and on the same date the sums were transferred to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom banks is clearly, for the purpose of construction. The same purpose cannot be attributed to advancing of such loans as deposits with such other banks and financial institutions because it is only that sum which is borrowed for the purpose of construction is said to be for the purpose of business and that incidental income earned out of such money kept in the banks only will be in the nature of income earned under the head 'income from other sources' and cannot be referred to as income earned during the course of business activity. This aspect is made clear vide the Supreme Court decision in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd., 227 ITR 172,.... 6.2 As per the law laid down by the Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e term 'derived from', the Hon'ble Courts have held that only that income which is: directly earned from the business source will be treated as business income. Any income which is incidental in nature including the interest income ought to be assessed only under the head 'income from other sources'. After considering various judgements, submissions of the assessee as well as facts of the case, the ld. CIT(A) held that the interest income earned of Rs..62,77,671/- is assessable under the head 'income from other sources' and the assessee is not entitled to set off of business expenses against the income shown under the head 'income from other sources' as the business of the assessee has not commenced. 6.3 We have also perused the judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnal Co-operative Sugar Mills Ltd. 243 ITR 2(SC), the assessee had deposited money to open a Letter of Credit for the purchase of the machinery required for setting up its plant. Therefore, the Hon'ble Supreme Court observed that income earned on such deposit was incidental to the acquisition of assets for the setting up of the plant and machinery and therefore, not a case where any surplus share capital money which was lying idle had been deposited in the bank for the purpose of earning interest. Thus, the Hon'ble Supreme Court held that the interest was a capital receipt, which would go to reduce the cost of asset. Whereas, in the present case in hand, the assessee has parked the loan amount in short term deposits with Banks and other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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