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TMI Blog1983 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings, the ITO found that the assessee had not done any business in India, but had earned interest on the bonds and proceeded to determine the income of the assessee under the head " Other sources " and brought to tax an amount of Rs. 18,07,868 under that head. Deducting a sum of Rs. 3,000 under s. 80L of the 1. T. Act, 1961 (hereinafter referred to as " the Act "), and after set off of the business loss arising from Malaysian business, the income was determined at Rs. 11,65,820. In the assessment order, the ITO stated that the loss carried forward for the assessment year 1970-71, after revision of that assessment giving effect to the order of the AAC, will be set off against this income and that appropriate depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that the interest income should be assessed under the head " Business ". On further appeal by the assessee to the Tribunal, contending that the assessee was carrying on business which was compulsorily acquired and the income which arose to the assessee should, therefore, be dealt with under the head " Business income " and not "Other sources" and, therefore, the loss in the assessment year 1970-71 should be brought forward and set off against this income and that the unabsorbed depreciation for the year 1970-71 should also be set off as a consequence in the assessment year 1971-72, the Tribunal held that the compensation given to the assessee in the shape of stock certificates of the Central Government was for the cessation of its b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the assessee argued that the assessee had been carrying on business in banking all these years and though its banking business was nationalised with effect from July 18, 1969, yet there was no resolution to the effect that the banking business carried on by the assessee should be stopped and, in its absence, the assets in the shape of bonds continued to be its trading assets and, therefore, the income referable to such assets ought to be dealt with under the head " Business income ". Strong reliance in this connection was placed by the learned counsel on the decision in CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306 (SC). On the other hand, the learned counsel for the Revenue submitted that the question whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income. But if they did not, then the income would not be business income, but would be properly subjected to tax treatment under the head " Other sources ", with the result that no question of carry forward and set off of a business loss or unabsorbed depreciation would arise. No doubt, originally, the assessee was carrying on business in banking in India and abroad. By virtue of the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the undertaking of certain banks including the assessee's stood transferred and vested with the corresponding new bank owned by the Government of India. Section 6 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, provided for payment of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised the compensation bonds as trading assets in the Malaysian business, even on the assumption that banking business was carried on there by the assessee. Indeed, the compensation bonds were made available to the assessee owing to the acquisition of the banking business of the assessee and in that sense, it could not be a trading asset of the assessee in its Indian business as it had no banking business in India after the nationalisation, nor did it have any other business in India or in Malaysia, in which business, the compensation bonds were employed or ploughed in as the trading assets of the assessee. The interest income on the bonds is thus not referable to the employment of the bonds its a trading asset either in India or in Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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