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TMI Blog2018 (6) TMI 1721X X X X Extracts X X X X X X X X Extracts X X X X ..... he income tax is attracted at the point when the income is earned from the fixed deposits/short term deposits and taxability of income is not dependent upon its destination or the manner of its utilization and respectfully following the above decisions, we confirm the order of the ld. CIT(A) in holding that the Assessing Officer rightly brought the interest income under the head income from other sources and dismiss the ground raised by the assessee. - I.T.A.No.930/Chny/2017 - - - Dated:- 13-6-2018 - Shri A. Mohan Alankamony, Accountant Member Shri Duvvuru RL Reddy, Judicial Member Appellant by: Shri G. Baskar, Advocate Respondent by: Ms. Sandhya Rani, JCIT ORDER Duvvuru Rl Reddy, This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 9, Chennai dated 30.12.2016 relevant to the assessment year 2009-10. The only effective ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in holding that the interest receipt of ₹.62,77,671/- is income and is to be assessed as income from other sources. 2. Brief facts of the case are that the assessee is engaged in he busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Alkali Chemicals Ltd. v. CIT (supra) and in the case of CIT v. Autokast Ltd. 248 ITR 110 (SC). 6. We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee was incorporated with the objective of promoting commercial buildings. Initially, an extent of 10.64 acres was taken on lease from Express Newspapers Pvt. Ltd. and subsequently surrendered on 26.03.2007. On the same day, an extent of 9.59 acres was once again transferred to the assessee company for the purpose of construction of a shopping mall and a commercial office complex in the premises. For this purpose of construction and project development expenditure, the assessee took financial assistance from several banks and made certain deposits with other banks and financial institutions from those funds. The assessee received an interest of ₹.62,77,671/- from the aforesaid deposits. The Assessing Officer assessed the same under the head income from other sources . 6.1 During the course of appellate proceedings, the assessee submitted that the interest income earned was inextricably linked to the setting up of the project and therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AR of the appellant is not similar to the facts in the case of the appellant. 7.3.6 As mentioned by the AR in his written submissions that the company has taken on lease 9.59 acres from its holding company M/s. Express Newspapers Pvt. Ltd. On this land, the appellant company start constructing shopping mall and commercial office complex. It is for this purpose of construction and project development, the company took loans from several banks and out of such loans, deposits are made in the other banks and financial institutions, out of which income was earned. From these facts, it is clear that obtaining loans from banks is clearly, for the purpose of construction. The same purpose cannot be attributed to advancing of such loans as deposits with such other banks and financial institutions because it is only that sum which is borrowed for the purpose of construction is said to be for the purpose of business and that incidental income earned out of such money kept in the banks only will be in the nature of income earned under the head income from other sources and cannot be referred to as income earned during the course of business activity. This aspect is made clear vide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have also perused the judgement of the Hon ble Supreme Court in the case of CIT v. Bokaro Steel Ltd. (supra). At page 321, the Hon ble Supreme Court made a note with regard to the interest earned out of short term deposits and the same is reproduced verbatim as under: During these assessment years, the respondent-assessee had invested the amounts borrowed by it for the construction work which were not immediately required, in short-term deposits and earned interest. It has been held in these proceedings that the receipt of interest amounts to income of the assessee from other sources. The assessee has not filed any appeal from this finding which is given against it. In any case, this question is now concluded by a decision of this Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. v. Commissioner of Incometax ([1997] 227 ITR 172). Hence, we are not called upon to examine that issue. [Emphasis applied] Since the assessee has not disputed in appeal and accepted that the earning of interest from short-term deposits is an income of the assessee from other sources in view of the decision in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT(supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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