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TMI Blog1995 (3) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... essee treated the interest of Rs. 13,14,045 on fixed deposits with banks as its income from business and claimed deduction on that amount also. The claim was allowed by the Assessing Officer when he completed the assessment under section 143(3) of the Act. 3. On 25-7-1991, the CIT issued notice to the assessee under section 263. He observed that the interest was taxable under the head " Other sources " and the Assessing Officer had wrongly treated the same as business income and had also allowed deduction under section 80HHC on the same. The CIT was of the view that this action of the Assessing Officer was erroneous and prejudicial to the interests of revenue. He, therefore, proposed to revise the assessment order. 4. The assessee by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the cases of CIT v. Tirupati Woollen Mills Ltd. [1992] 193 ITR 252 and CIT v. K. G. Roy Chowdhury [1992] 195 ITR 801 that the view of the CIT was erroneous and not legally tenable. He contended further that the earning of the interest in the facts and circumstances of the assessee's case was an integral part of the business activity and cannot be separated from the business income. He drew our attention to the balance-sheet as on 30-4-1987 and pointed out that the fixed deposit with IOB was Rs. 1,24,47,726 whereas the fixed deposits with other banks or companies were comparatively negligible. These deposits were as under : 1. American Express Bank - Rs. 15,000 2. Punjab Sindh Bank - Rs. 2 lakhs 3. Usha Alloy Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1988-89 and section 80HHC(3) stood as under for this year : " (3) For the purposes of sub-section (1), profits derived from the export of goods or merchandise out of India shall be,-- (a) in a case where the business carried on by the assessee consists exclusively of the export out of India of the goods or merchandise to which this section applies, the profits of the business as computed under the head 'Profits and gains of business or profession' ; (b) in a case where the business carried on by the assessee does not consist exclusively of the export out of India of the goods or merchandise to which this section applies, the amount which bears to the profits of the business (as computed under the head 'Profits and gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his favour. In this case the High Court took the view that where the company utilises its commercial assets, which were lying in the form of surplus cash, for earning interest, the interest arises from the utilisation of commercial assets only and would, therefore, be business income. The ratio of this decision favours the assessee in the present case. 9. The view of the CIT that the assessee's business is not that of earning interest and, therefore, the interest cannot be treated as business income cannot be sustained. What is business income and what is not business income has to be determined on the facts of each case and merely because the professed business of an assessee is not that of earning interest on fixed deposit, it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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