TMI Blog2017 (4) TMI 1603X X X X Extracts X X X X X X X X Extracts X X X X ..... ing bank guarantee/margin money, etc. as a necessity of business then in that eventuality the interest earned on such funds is to be taxed under the head business income and not income from other sources. After appreciating the facts of the present case, we are of the considered view that Ld. CIT(A) fell in error while deciding this ground and has wrongly held that the interest receive is an independent receipt of income and not derive from the business of the assessee whereas the factual position is that the interest credited to the P L account was earned on fixed deposits made with banks as margin money towards bank guarantee taken from business purpose. Hence in such circumstances, the assessee has proved that the fixed deposits h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 02.09.2010 and the last date for filing the appeal before the Tribunal was 01.11.10. It was submitted by Ld. AR that because of reasons beyond the control of the assessee, the appeal could not be filed within the time and ultimately the same was filed on 23.02.11. As such there occurred a delay of 113 in filing the appeal. The Ld. AR also drawn our attention towards the affidavit filed by the director Sh. Kamlesh V. Shah of M/s Total Commodities Pvt. Ltd.(Assessee company) in support of the application for condonation of delay. This affidavit also contains the detail and reasons for seeking condonation of delay. 4 On the other hand, Ld. DR appearing on behalf of the revenue contested the application filed by the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in confirming the action of the A.O. whereby the A.O computed the interest income of Rs. 3,00,320/- under the head 'Income from other sources' as against income under the head 'Profits and Gains of Business'. 2.2 While doing so, the A.O. erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. 3. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 7. The brief facts of the case are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as the bank guarantee was part and parcel of its business activity, therefore the interest earned on fixed deposits was also part of the business income. 13 The Ld. DR appearing on behalf of the revenue relied upon the orders of lower authorities and submitted that the only business activity of the assessee has been broking etc. in relation to commodities. It was further argued that the impugned interest is only incidental to its business and this only means that it is independent of receipt of income and not derive from the said business and hence the same was correctly computed under the head income from other sources . After hearing the parties at length and going through the judgments referred to by the parties and after analyz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore interest received on such deposits should be treated as business income. Per contra, the Id. DR supported the findings of the lower authorities. A perusal of schedule 'G' of current assets forming part of the balance sheet show that the fixed deposits are lodged with banks as margin for funding working capital facilities, which shows / that the fixed deposits have a direct nexus with the working capital facilities availed from the bank. In our considered view, the interest earned from such deposits of the money kept apart for the purpose of business is to be taxed under the head income from the business and could be not taxed under 'income from other sources'. We draw support from the decision of the Hon'ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be taxed under the head business income and not income from other sources. After appreciating the facts of the present case, we are of the considered view that Ld. CIT(A) fell in error while deciding this ground and has wrongly held that the interest receive is an independent receipt of income and not derive from the business of the assessee whereas the factual position is that the interest credited to the P L account was earned on fixed deposits made with banks as margin money towards bank guarantee taken from business purpose. Hence in such circumstances, the assessee has proved that the fixed deposits have a direct nexus with the working capital facilities availed from the banks. Hence in our view, the interest earned from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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