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TMI Blog2005 (5) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... /c. of Rs. 94,492. On scrutiny of books of account maintained by the appellant, the Assessing Officer found that surplus money not required for business was advanced to some persons as interest bearing loans. It has been noted that the appellant has earned total interest amounting to Rs. 1,08,322 out of which the appellant has paid interest of Rs. 13,830 and after adjustment the balancing amount of Rs. 94,492 was credited to Profit Loss A/c. Borrowings from Sh. Bahadur Singh Suklecha HUF and Smt. Santosh Suklecha were utilized for purchases of ready goods and were squared up during the year. In view of this fact interest received by appellant did not pertain to appellant business of export business. Therefore interest income of Rs. 1,08,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03] 261 ITR (AT) 34 (Jp.) (SB) in support of his claim. Whereas the Ld. DR has relied upon the decision of Ld. CIT(A). 6. We have heard both the parties. The Assessing Officer has given the findings that on scrutiny of books of account it is found that surplus money not required for business was advanced to some persons by the assessee as interest bearing loans. The appellant did not press the disallowance of interest paid of Rs. 13,830 and as per findings of Assessing Officer the borrowings on which interest has been paid have been squared up. Therefore question of netting of interest does not arise. Therefore, the decision dated 6-4-2004 in the case of Sunil Jain v. ITO [IT Appeal No. 161 (Jp.) of 1998] where decision of Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or making repayment to the creditors, it was withdrawn by the assessee-company and the funds were utilized for the aforesaid purposes. The Tribunal held that such activity would not constitute business. The company merely invested its funds when they were not required by it for the time being. As such the income from such investment cannot be assessed as business income. The Tribunal has further held that such income would be assessable only under section 56 of the Income-tax Act, 1961." 8. The Ld. DR has also relied upon the decision in the case of CIT v. Rajasthan Land Development Corpn. [1995] 211 ITR 597 (Raj.) relevant page 602 and 603 where it has been held : "from the various decisions and on the interpretation of various p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors to carry on the business of money-lending or lending of money. In the present case from the various provisions referred to above, we find that there is no such provision by which an intention to carry on the business of money-lending could be inferred. Accordingly, the income which has been received by the assessee is to be treated as income from other sources and not business income." 9. In the present case nothing emerges out from the perusal record and facts that the appellant is regularly carrying on business of lending on money as a systematic activity. The appellant was investing only the surplus funds and was deriving interest thereon instead of keeping them idle. Relying upon the ratio by the Hon ble Jurisdictional High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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