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TMI Blog2015 (12) TMI 1868X X X X Extracts X X X X X X X X Extracts X X X X ..... s no deployment of surplus income and it was not an independent transaction de hors by business rather JV partner had kept it in the account. It was claimed that the assessee had already started business for which our attention was invited to page 3 of the annual report. The crux of the argument is that it was not an independent activity of the assessee to put the money in bank for which our attention was invited to para 14 of the order of the Ld. DRP (page 8). Reliance was placed upon the decision in the cases of CIT Vs. Indo Swiss Jewels Ltd. 284 ITR 289 (Bom), CIT Vs. Lok Holdings 308 ITR 356 (Bom.) and Sanam Progetti SPA Vs. Addl. CIT 132 ITR 70 (Delhi). On the other hand, the Ld. DR contended that no business commenced during the year by further inviting our attention to para 7 to 11 of the Ld. DRP. The crux of argument is in support to the impugned order. 3. We have considered the rival submissions and perused the material available on record. the facts in brief are that the assessee company was incorporated in Caymen Island, having its registered office at Century Yard. The assessee declared nil income in its electronically filed return on 31.10.2007. The case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest income and foreign exchange gain has not been derived from/attributable to the business of the assessee, therefore, these decisions has to be followed. We note that Hon'ble Jurisdictional High Court in CIT Vs. Lok Holdings (2009) 308 ITR 356 (Bom.) while coming to a particular decision distinguished the decision from Hon'ble Apex Court, pronounced in CIT Vs. Bokaro Steel Ltd. 237 ITR 315 (SC), Tuticorin Alkalie Chemicals and Fertilizers Ltd. 227 ITR 172 and then held that accrued interest arises out of business activity is assessable as business income and not income from other sources. Identically, Hon'ble Jurisdictional High Court in the case of CIT vs. Indo Swiss Jewels Ltd and Another 284 ITR 389 (Bom.) wherein amount was set apart for import of machinery was invested in short term intercorporate deposits. Such interest income was held to be assessable as business income. There are various decisions in an identical situation but the fact of each case has to be kept in juxtaposition before taking any decision. (a). So far as interest of income of Rs. 545,702/- on the funds placed with banks are concerned, there is a factual finding in para 7 of the impugned order tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 553 (Ker.) and Abad Enterprises Vs. Cit 253 ITR 319 (Ker.), wherein, interest income earned on short term deposit as held to be not derived from the business of the assessee and said decision was confirmed by the Hon'ble Apex Court. It is further noted that the reliance placed by the assessee on the judgment of Hon'ble Bombay High Court in the case of CIT vs Lok Holdings (supra), is misplaced because in the said judgment also, Hon'ble High Court has distinguished the judgment of Hon'ble Supreme Court in the case of Tuticorin 227 ITR 172 on the ground that in that case, the business had not commenced, relevant para of the judgment of Hon'ble High Court is reproduced below:- "In our view, the facts of the present case are completely different than the facts in the case of Tuticorin (1997) 227 ITR 172 (SC). In that case, the business of the assessee-company had not commenced and, therefore, the Apex Court held that there could be no income from business." Thus, assessee will not be able to take benefit of this judgment. Similarly, the other cases relied upon by the assessee are also distinguishable on facts of this case, consequently, on this count, we affirm the stand of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said being deemed for this purposes to have been modified to the extent necessary to give effect to the terms of the agreement. If the provision of the Act is analysed that it can be concluded that the production sharing contract is an independent accounting regime which includes tax treatment of cost, expenses, income, profit etc. it prescribes separate rule of accounting as it is a complete code by itself. Reference may be made to Joshi Technologies International Inc. Vs. Union of India (2013) 353 ITR 86 (Del.). The additional benefits, apart from the normal allowance, admissible under other provisions of the Act is to be allowed as a deduction in computing the business profit of the assessee provided such allowances are specified in the agreement of the assessee entered into with the Central Government etc. and then the allowance shall be computed in the manner specified in the agreement. In the present appeal, neither such agreement was discussed before us nor there is a finding in the impugned finding, therefore, we set aside this issue to the file of the Ld. DRP to examine the facts and then decide the issue in accordance with law, therefore, this ground is allowed for s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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