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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 ..... or the respondent. JUDGMENT The judgment of the court was delivered by 1. R. S. MOHITE J.- This appeal has been filed by the Revenue on the footing that there arise three substantial questions of law as set out in paragraph 4(a), (b) and (c) of the appeal memo. The three substantial questions of law, as framed, are as under: "4(a) Question is whether, on the facts and circumstances of the case and in law, the Tribunal is right in 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 hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard under the head "Income from other sources". On an appeal by the assessee, the Commissioner of Income-tax (Appeals), following the decision of the Tribunal dated April 29, 2002, delivered in the case of East Coast Enterprise, deleted the income. The Revenue preferred an appeal against the order passed by the Commissioner of Income-tax (Appeals) and by a judgment and order dated June 14, 2004, the Income-tax Appellate Tribunal dismissed the 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 assessab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to earn income out of the surplus funds, it had invested the amount for the purpose of earning interest and the interest thus earned would be of revenue nature and would have to be taxed accordingly. It was further held that the company could not claim any reliefs under section 70 or 71 since its business had not started and there could not be any computation of business income or loss incurred by the assessee. In such a situation, the expenditure incurred by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the bank or given on temporary loans until such time as they were required for construction. Thus, interest was earned on these amounts. In due course the assessee's appeal was considered by the Tribunal and the Tribunal recorded a finding that the entire interest sprang from the business activity of the assessee and did not arise out of any independent activity. This court held that the aforesaid interest was assessable as income from business and affirmed the correctness 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his interest was "business income",. The Tribunal found that the assessee was not in the business of money-lending and, therefore, the interest income could not be said to be business income. It treated the income as "Income from other sources". The fact situation in that case was also different from the fact situation in the present case. In that case, the assessee-company was not in the business of money-lending. In the present case, admittedly, the assessee-company was engaged in a construction business and had deposited money received in the course of such business with the bank, earning interest thereon. 9. For the reasons aforesaid, in our opinion, there is no merit in this appeal as the questions of law as raised would not arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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