2024 (10) TMI 768 - SCH - Income Tax

Treating interest earned on short-term fixed deposit - income from other sources and not business income - as decided in 2019 (4) TMI 1361 - ITAT NEW DELHI which is for the Assessment Year 2010-2011 in respect of very same Assessee, wherein on the question as to whether the interest income derived from short-term fixed deposit made in a Bank is eligible for deduction for under Section 10-A or 10-B was considered on the basis of certain judgments and the matter was remanded to the Assessing Officer for giving a finding bearing in mind the facts of the Assessee and its business. Appellant submitted that the impugned Order, which is for the earlier Assessment year, namely, 2009-2010 was not right in holding that the FDs were not being maintained to meet any requirement of the Bank for opening LC or any other business purpose and therefore, the interest income had to be treated as income from other sources. HELD THAT - We dispose of this appeal by setting aside the impugned order by remanding the matter to the Assessing Officer for consideration of the issue for AY 2009- 2010 by bearing in mind the nature of business of the Assessee and the purpose for which the short term fixed deposit accounts were opened by the Assessee in the Bank and the nature of income and the treatment of interest income as income from other sources or business income. It is needless to observe that the AO shall give his finding as expeditiously as possible.Further, we have not expressed anything on the merits of the matter. The appeal is allowed and disposed of in the aforesaid terms.

Summary

The Supreme Court granted leave in an appeal against the High Court order. The case involves interest income from fixed deposits and remands the matter to the Assessing Officer for further consideration for the Assessment Year 2009-2010. The Assessing Officer is directed to consider the nature of the Assessee's business and the purpose of the fixed deposits in determining the treatment of the interest income. The Court did not express any opinion on the merits of the case.