9911796707
TMI Blog2004 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Appellate Tribunal, New Delhi has referred the following question of law under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as the Act, for opinion to this court: "Whether on the facts and in the circumstance of the case, the Tribunal was right in holding that interest of Rs. 2,54,279 was assessable as assessee's income for the assessment year 1978-79?" Briefly stated the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1978-79. The applicant is a public limited company incorporated under the provisions of the Companies Act, 1956. It is a Government company. It was incorporated in the year 1974. It is engaged in the business of manufacturing sugar b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal had reversed the order passed by the Commissioner of Income-tax (Appeals). It had held that this amount of interest in question was assessable under the head "Income from other sources". We have heard Sri Vikram Gulati, learned counsel for the applicant and Sri A.N. Mahajan, learned standing counsel appearing for the Revenue. Learned counsel for the applicant submitted that the applicant was in the process of setting up a sugar mill for which purpose it had borrowed funds from various financial institutions, corporations and banks. In order to use the idle money so as to minimize the cost of construction by reducing its liability towards interest, as a prudent person the applicant had invested this surplus and idle funds in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) CED v. Smt. Kalawati Devi [1980] 125 ITR 762 (All); (4) Addl. CIT v. Indian Drugs and Pharmaceuticals Ltd. [1983] 141 ITR 134 (Delhi); (5) Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997] 227 ITR 172 (SC); (6) CIT v. Coramandal Cements Ltd. [1998] 234 ITR 412 (SC). Even though a large number of decisions have been cited by counsel for the parties we find that the apex court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. [1997] 227 ITR 172 has held that the interest earned on surplus funds kept in short-term deposits is chargeable under section 56 of the Act. The apex court has held as follows: "The basic proposition that has to be borne in mind in this case is that it is possible for a company to h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
