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TMI Blog2008 (2) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant. M. V. Seshachala for the respondent. JUDGMENT The judgment of the court was delivered by DEEPAK VERMA J. - Shri Parthasarathy for the appellant and Shri M. V. Seshachala for the respondent. 2. The appellant/assessee is before us challenging the correctness, propriety and legality of the order passed by the Income-tax Appellate Tribunal on January 9, 2002, in I. T. A. No. 934/Bang/1993 for the assessment year 1990-91, under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act" for brevity). The appeal before the Tribunal was at the instance of the Revenue against the order of the Commissioner of Income-tax (Appeals), dated March 1, 1993. Even though the appeal has been admitted on the following substantial questions of law, namely:- "(1) Whether the interest earned by the appellant out of the deposits were excludible from the eligible profits for the purpose of deduction under section 32AB of the Act ? (2) Whether in view of the provisions of section 32AB(3) of the Act, the Tribunal was justified in excluding the interest which formed part of the profits computed in accordance with Parts 2 and 3 of Schedule VI to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia and US agency for International development for import of yellow maize (corn) under an US aid maize programme. The Union of India had designated "NAFED" as its agency to handle aid maize programme on behalf of the Union of India. The designed agency in turn appointed State level agency for distribution of aid maize. In the State of Karnataka, the assessee was identified as a State level agency. Accordingly, it was required to handle and distribute maize amongst actual target beneficiaries, in accordance with the guidelines provided by NAFED. For the services rendered by the assessee in this regard, it was only to receive certain service charges from NAFED at the rate of Rs. 15 per metric ton. According to the assessee, the said amount of service charges of Rs. 15 per metric ton was too meagre and low, so it wanted to enhance it by a further sum of Rs. 10 per bag of maize from each of the beneficiaries, who had received maize from the assessee. The Government of Karnataka on principle had agreed that the assessee would be entitled to charge Rs. 10 more per bag from the beneficiaries. 7. The Assessing Officer brought to tax the surplus out of the recovery made by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected from the beneficiaries with regard to aid maize could be treated as income in the hands of the assessee or it would be an amount collected by the assessee and held in a fiduciary capacity for the State of Karnataka. 11. During the course of arguments, learned counsel for the appellant further contended that the Tribunal has erroneously placed reliance on a judgment of the Gauhati High Court reported in CIT v. Dinjoye Tea Estate P. Ltd. [1997] 224 ITR 263, to come to the conclusion that interest and dividend are not includible in income for the purposes of calculating deduction under section 32AB of the Act. 12. It is to be seen that it was a reference to the High Court of Gauhati under section 256(1) of the Act (since amended) wherein the following question was formulated to be answered by the High Court: "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that interest and dividend are to be included in income for the purposes of deduction under section 32AB of the Act ?" 13. In view of the question of law referred to the High Court, it has been contended that it was not required on the part of the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on having been expressed by the Full Bench of the Kerala High Court, learned counsel for the appellant still attempted to hammer before us that what is actually to be seen is from the facts and features of each case, whether the interest income is directly related to the business activities of the assessee or it was an income from other sources. To canvass this point further, it has been submitted that a finding has to be recorded in this regard and the order passed by the Assessing Officer is bereft of this finding. To further reinforce the point in this regard, another Division Bench judgment of this court reported in CIT v. Producin P. Ltd. [2007] 290 ITR 598 has been put into service. The Division Bench has held as under (headnote): "So as to come to the conclusion as to what would in fact constitute a business income and what would constitute as income from other sources held (i) that what is business income and what is not business income has to be determined on the facts of each case. In the instant case, the main activity of the assessee was export business and not that of earning interest on short-term fixed deposits. The deposits in the bank were made with the money ..... X X X X Extracts X X X X X X X X Extracts X X X X
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