2010 (3) TMI 1169 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against order relating to treatment of interest income on fixed deposits as business income or income from other sources for A.Y. 2003-04.

Summary:
1. The assessee, a company engaged in oil and gas exploration, earned interest on fixed deposits with Barclays Bank. The Assessing Officer treated the interest income as income from other sources, while the assessee claimed it to be business income related to securing a loan for business purposes.
2. On appeal, the learned CIT(A) directed the interest income to be assessed as business income, citing previous orders and the nexus between the deposit and the business activities of the assessee.
3. The Revenue appealed to the Tribunal, arguing against the CIT(A)'s decision. The assessee pointed out that the Revenue had accepted similar orders in previous years and cited relevant court decisions supporting their claim.
4. The Tribunal upheld the CIT(A)'s order, emphasizing the principle of consistency and the direct nexus between the deposit and the business activities of the assessee as per previous court decisions.

Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order to treat the interest income on fixed deposits as business income for the assessment year in question.