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TMI Blog2002 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ove said question arose are as follows: The assessment years are 1985-86 and 1986-87. The assessee is a company engaged in the business of design, fabrication, erection and commissioning of plant and machinery of paper mills and, inter alia, received advances from the customers. Since it was not necessary to employ the entire funds so received immediately for the purpose of business, the excess fund available with the assessee was deposited with the banks as fixed deposits for varying periods. The interest income earned by the assessee in a sum of Rs. 3,37,390 for the assessment year 1985-86 was credited to the profit and loss account and returned by the assessee as part of business income. The Assessing Officer treated the interest so ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business purpose of the assessee has been deposited for the purpose of earning interest and if the amount is required for the business that would have been utilised for the purpose of business. Hence, the interest earned from out of the deposits made by the assessee could rightly be treated as business income as held by the Commissioner of Income-tax, which has been affirmed by the Tribunal. There is no necessity to interfere with such a finding. We heard the arguments of learned counsel on either side. We are of the opinion that the finding arrived at by the Tribunal cannot be sustained. The assessee has received a sum of Rs. 3,37,390 for the assessment year 1985-86 and Rs. 1,75,612 for the assessment year 1986-87. That was in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex court in Tuticorin Alkali Chemicals and Fertilizers Ltd.'s case [1997] 227 ITR 172, was in the background of the fact that the assessee therein had not commenced business and therefore could not have claimed that the income received on fixed deposit was part of its business income and therefore the law laid down by the apex court is not applicable to the facts of the present case. We are not able to accept the argument of learned counsel that the law laid down by the apex court is confined to the cases where a company had not commenced business. The apex court proceeded on the basis that in the usual course, interest received by the company from bank deposits and loans could only be taxed as income under the head "Income from other sou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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