2012 (3) TMI 636 - AT - Income Tax

Summary

Issues involved: Assessment of interest income as "income from other sources" for the A.Y. 2008-09.

Comprehensive details of the judgment:

Issue 1: Assessment of interest income
The appellant challenged the order of the Ld. CIT (A) regarding the assessment of interest income of Rs. 11,21,361/- as "income from other sources." The appellant, engaged in Electronics Design Automation, had credited interest income in its profit and loss account. The A.O. assessed this income as 'income from other sources,' which was contested by the appellant before the Ld. CIT (A) without success. The appellant argued that the loan obtained from the Technology Development Board, invested in fixed deposit pending utilization, should be treated as 'income from business.' The Tribunal noted that the temporary parking of the borrowed amount of the loan, on which the interest was earned, should not be considered as 'income from other sources.' The Tribunal found that both the A.O. and Ld. CIT (A) erred in not treating the interest earned on the temporary parking of the loan amount as business income. Consequently, the Tribunal allowed the ground taken by the appellant and directed the A.O. to treat the 'interest income' as 'business income' of the assessee.

Decision:
The Tribunal allowed the assessee's appeal, directing the A.O. to treat the interest income as business income.

Order Date: 28th March, 2012.