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TMI Blog2018 (12) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of the assessee and against the Revenue. Whether assessee is entitled to set off the un-absorbed depreciation against the income from other sources ? - Held that:- The second question requires no answer at our hands for it being a settled position that there could be no depreciation claimed as against income from other sources. This will have no effect in the case of the assessee insofar as the first question being answered in their favour. - ITA. No. 113 of 2011 - - - Dated:- 14-12-2018 - MR K. VINOD CHANDRAN AND MR ASHOK MENON, JJ. For The Appellant : ADV. SRI. P. K. R. MENON, SR. COUNSEL, GOI (TAXES) AND SRI. JOSE JOSEPH, SC, FOR INCOME TAX For The Respondent : ADVS. E K NANDAKUMAR (SR), BENNY P THOMAS, JOHN MATHAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid deposits, the assessee claimed as income from profits and gains of business. The Department, however, was of the opinion that the interest income does not change its character merely because they are from the deposits which are by reason of a contract and the same can only be treated as income from other sources. On the question of whether depreciation can be set off against the income from other sources, there can be no dispute that it cannot be. What we are called upon to decide is only as to whether the interest income earned by the assessee from the specific activities above-mentioned could be termed as profits and gains of business and not income from other sources. The assessee relies on the decision in C.I.T. v. Govinda Choud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri.Raja Kannan, alertly points out that there is substantial difference between the facts and the law declared in K.Ravindranathan Nair and that with which we are concerned. In K.Ravindranathan Nair, the issue was one of deduction under Section 80HHC and whether the interest income received could be said to be profits derived from exports. Section 80HHC specifically granted deduction only to profits derived from exports. Here, the question would be as to the head under which the income has to be assessed. 6. We notice from Tuticorin Alkali Chemicals that the Hon'ble Supreme Court had specifically noticed the various heads of 'income', as it was existing then. As of now, the only amendment is insofar as the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from abroad for the purposes of executing the contract itself. Likewise, the margin money deposits and deposits ensuring performance guarantee are also specific terms of the contract. The income so earned from the deposits by way of interest is in pursuance of the business itself for the deposit being intrinsically connected with the contract entered into by the assessee and the foreign purchaser. 8. We also find a clear distinction in the dictum laid down in Pandian Chemicals Ltd. There again, the Hon'ble Supreme Court was concerned with the words derived from in Section 80HH. It is in this context that the Hon'ble Supreme Court found that the deposit required for supply of electricity, though the supply of power was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts he has also to face disputes with the State Government and he has also to reckon with delays in payment of amounts that are due to him. If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to the assessee s receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held to say that this interest is totally dehors the contract business carried on by the assessee. It is well settled that interest can be assessed under the head income from other sources only if it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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