TMI Blog2011 (12) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income as returned by the appellant. 2. The learned Commissioner of Income Tax (Appeals) erred in denying the deduction pertaining to the write off of ₹ 7,00,000/- of stores and spares. 3. In the alternative and without prejudice to the above the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not allowing the depreciation claim in regard to the stores and spares treated as capital asset. 2. The assessee is a company wholly owned by the Government of Maharashtra established for development of tourism in the State of Maharashtra. The assessee gets grants from Central and State Government from time to time. The same are deposited in fixed deposits which yielded interest income. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it deposited with the bank. The Assessing Officer assessed the interest income earned on money deposited with the bank as income from other sources and thus made an addition under the head Income from other sources for the assessment year 1992- 93. The Commissioner (Appeals) deleted the addition. The Tribunal on finding that the entire interest sprang from the business activity of the assessee and not out of any independent activity, held that the interest income received by the assessee was business income. On further appeal, the Hon ble Bombay High Court held that the Tribunal was justified in holding that the interest income received by the assessee was assessable as business income. 3. CIT v. Paramount Premium P. Ltd. [1991] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were kept by the assessee in the various companies for short terms for payment for imported machinery. The Commissioner (Appeals) and the Tribunal held that the interest was assessable as business income. On appeal to the High Court, it was held that from the facts and circumstances of the case it was clear that the inter-corporate deposits were made by the assessee from the surplus funds that were set apart for payment for imported machinery. The interest earned on the short term deposits of the money kept apart for the purposes of business had to be treated as income earned from business and could not be treated as income from other sources. 4. The ld. D.R relied on the orders of the revenue authorities and in particular relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ro Steel Ltd. 236 ITR 315 (SC), CIT Vs. Karnataka Power Corpn. 247 ITR 268 (Karn), Bongaigaon Refinery Petrochemicals Ltd. Vs. CIT 251 ITR 329(SC), CIT Vs. Govinda Choudhury Sons 203 ITR 881(SC), CIT Vs. Karnal Co-operative Sugar Mills Ltd. 243 ITR 2 (SC), CIT Vs. Autokast Ltd. 248 ITR 110 (SC), CIT Vs. Paramount Premises (P) Ltd. 190 ITR 259, Shree Krishna Polyester Ltd. Vs. DCIT 274 ITR 21 (Bom), Commissioner of Income-tax Vs. Indo Swiss Jewels Ltd. 284 ITR 389 (Bom), CIT Vs. Lok Holdings Ltd. 308 ITR 356 (Bom), South India Shippin Corpn. Ltd. Vs. CIT 240 ITR 24 (Bom), Murli Investment co. Vs. CIT 167 ITR 368 (Raj), K.Ravindranathan Nair Vs. DCIT 262 ITR 669 (Ker), Southern Cashew Exporters Vs. DCIT 130 Taxman 203 (Ker), Urban Stanisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come is of a kind which is not to be excluded from total income and if it is not chargeable to income-tax under any of the heads specifically enumerated in items A to E of Section 14. The question of classifying a head of income under section 56 can, therefore arise where it does not form part of any of the specifically enumerated heads. In Para 27 the Hon ble Court observed as follows: 27. Ordinarily, where an Assessee invests funds surplus to the business and earns interest, such income does not constitute business income but falls under the head Income from other sources . Merely because an Assessee carries on business and the income of the business is invested in deposits, that would not result in an inference that the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) relied upon by the learned D.R. supports the case of the Revenue. The decisions relied upon by the learned counsel for the Assessee have all been considered by the Hon ble Bombay high Court in the case of Swani Spice Mills (P) Ltd. (supra). The decision in the cse of Shree Panchaganga Sahakari Sakhar Karkhana Ltd. (supra) relied upon by the learned counsel for the Assessee has not been considered by the Hon ble Bombay high Court in the case of Swani Spice Mills (P) Ltd. (supra. We are of the view that the said decision is of no assistance to the plea of the Assessee. The decision relates to a case of a Co-operative Society where collection of deposit and earning interest thereon was considered to be part of the bye laws of the soci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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