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TMI Blog2002 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... interest received by the assessee from the fixed deposit of surplus funds should be assessed under the head "Income from business"?" – Held, no – This question is answered against the assessee - - - - - Dated:- 4-2-2002 - Judge(s) : V. S. SIRPURKAR., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by: V.S. Sirpurkar J.-Two questions are referred to us. They are, "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled to weighted deduction under section 35B on foreign travel, advertisement, foreign branch expenses, etc., though the assessee was only purchasing goods from China and selling the same in USA and no export of Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Africa to the U.K. This claim was disallowed by the Income-tax Officer stating that section 35B would apply only if the exports were made from India. The High Court answered this question in the affirmative that is in favour of the assessee and against the Revenue and as has been pointed out earlier, the apex court has also confirmed the finding and the reasoning of the Bombay High Court in that case. Thus, the only ground on which the Department questions the order of the Tribunal is that the exports are not ex-India in this case. The question having been directly answered by the Supreme Court against the Department and in favour of the assessee, the reference is answered accordingly in so far as the first question is concerned. The second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. That does not mean that until and unless the company commences its business, its income from any other source will not be taxed. If the company, even before it commences the business, invests the surplus funds in its hands for purchase of land or house property and later sells it at profit, the gain made by the company will be assessable under the head 'Capital gains'. Similarly, if a company purchases a rented house and gets rent such rent, will be assessable to tax under section 22 as income from house property. Likewise, a company may have income from other sources. It may buy shares and get dividends. Such dividends will be taxable under section 56 of the Act. The company may also, as in this case, keep the surplus funds in short-te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbon Block Ltd. v. CIT [1982] 136 ITR 205 (Cal) and Addl. CIT v. Madras Fertilisers Ltd. [1980] 122 ITR 139 (Mad). The learned judges have also commented that these three decisions were in accord with Tuticorin Alkali Chemicals [1997] 227 ITR 172 (SC), and that it was unfortunate that they were not brought to the notice of the High Court and the court has therefore held that the Tribunal was right in holding that the interest from the bank deposits and other interest on loan to others is to be assessed under the head "Income from other sources". Situation is no different here and we have already pointed out that the assessee here has invested amounts in the short-term deposits and has earned an income therefrom. We see no reason to take any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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