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2020 (11) TMI 649 - AT - Income TaxCorrect head of income - fixed deposit interest income - Income from Business Profession or Income from Other Sources - HELD THAT - We find that the facts of the assesee involved for the AY 2013-14 i.e the year under consideration are exactly identical with that facts prevailing in AY 2011-12 2012-13. We find that for the AY 2011-12, this Tribunal in assessee s own case 2018 (6) TMI 1725 - ITAT MUMBAI had already adjudicated the very same issue in dispute before us and had dismissed the appeal of the revenue as held interest earned by the assessee was obviously attributable and incidental to the business carried on by it, that it would not be correct to say that this interest was totally de hors the business carried on by it. It is well-settled that interest can be assessed under the head Income from other sources, only if it cannot be brought within one or the other of the specific heads of charge. In the case before us the interest income is clearly and justifiably assessed as business income. In short, the case under consideration is not a case of depositing unutilized and surplus money by the assessee to earn interest and, therefore, the interest earned by the assessee cannot be assessed as Income from other sources - Decided in favour of assessee.
Issues:
1. Categorization of fixed deposit interest income under Income from Business & Profession or Income from Other Sources. Analysis: The appeal filed by the revenue in ITA No.444/Mum/2019 for Assessment Year (AY) 2013-14 questioned the categorization of fixed deposit interest income under Income from Business & Profession instead of Income from Other Sources by the ld. Commissioner of Income Tax (Appeals)-04, Mumbai. The Tribunal noted that the facts of the assessee for the AY 2013-14 were identical to those of AY 2011-12 and 2012-13. Referring to previous judgments, the Tribunal highlighted that for AY 2011-12, the Tribunal had already adjudicated a similar issue in the assessee's favor. The Tribunal emphasized that the interest income earned by the assessee was attributable and incidental to its business activities, as the advances received were directly linked to the business of film production for government entities. The Tribunal reasoned that the interest earned could not be treated as income from other sources as it was clearly associated with the core business operations of the assessee. The Tribunal referred to a specific case, Lok Holdings, where interest income received by an assessee engaged in construction business was considered as business income. The Tribunal distinguished other cases cited by the Department, emphasizing that the interest income in the present case was integrally connected to the business activities of film production. Therefore, the Tribunal concluded that the interest income earned by the assessee had to be treated as business income and not as income from other sources. The Tribunal upheld the order of the First Appellate Authority (FAA) which allowed the claim made by the assessee regarding the categorization of interest income. The Tribunal further highlighted that similar orders had been passed for AY 2011-12 and 2012-13 in favor of the assessee. Given the identical nature of facts across these assessment years, the Tribunal dismissed the grounds raised by the revenue and ultimately dismissed the appeal. The judgment reiterated that the interest income earned by the assessee was directly linked to its film production business for government entities, and therefore, should be categorized as business income, not income from other sources. In conclusion, the Tribunal dismissed the appeal of the revenue, relying on established judicial precedents and emphasizing the direct link between the interest income earned and the core business activities of the assessee in film production for government entities.
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