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TMI Blog2008 (1) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleting the addition on the ground that in the case of East Coast Enterprises, the Tribunal had upheld the deletion without discussing the facts of the said case of East Coast Enterprises? (b) Question is whether, on the facts and circumstances of the case and in law, the Tribunal is right in holding that the interest income cannot be assessed as income from other sources without referring to section 56 of the Income-tax Act and contrary to the decision of the apex court reported in Tuticorin Alkali Chemicals and Fertilisers Ltd. v. CIT [1977] 227 ITR 172? (c) Question is whether, on the facts and circumstances of the case and in law, the Tribunal is right in coming to a conclusion that the interest income received by the respondent is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal filed by the Revenue. It is in such circumstances, that the present appeal came to be filed. 3. The short and basic issue on which the three substantial questions of law as raised, turn, is whether the interest income earned by the assessee as set out hereinabove would be assessable as "income from business" or as "income from other source". 4. On behalf of the Revenue, counsel contended that the issue had been dealt with and settled by a judgment of the apex court in the case of Tuticorin Alkali Chemicals and Fertilisers Ltd. v. CIT [1977] 227 ITR 172. In that case, the assessee Tuticorin was a company incorporated in 1971 for the purpose of manufacturing heavy chemicals. It commenced trial production only on June 30, 1982. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee could not be allowed, as a deduction nor could it be adjusted against any other income under any other head. Similarly, any income from a non business source could not be set off against the liability to pay interest on funds borrowed for the purpose of purchase of plant and machinery even before commencement of the business of the assessee. 5. In our view, the facts of the present case are completely different than the facts in the case of Tuticorin [1977] 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. 6. Apart from this, the business of the assessee in that case was the manufacturing of heavy chemicals. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the view of the Tribunal that the interest so earned was "Income from business". In our view, the law as laid down in CIT v. Paramount Premium P. Ltd. [1991] 190 ITR 259 (Bom) is squarely applicable to the facts of the present case. 8. The advocate for the assessee also brought to our notice a judgment of the apex court in the case of CIT v. Bokaro Steel Ltd. reported in [1999] 236 ITR 315. In that case, the assessee-company was in the business of manufacturing of steel. For the purpose of construction of the plant the company gave advances to its contractors and earned interest from such advances, which were adjusted against the charges payable to the contractors, thus utilising the interest amount to reduce the cost of constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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