ITO, New Delhi V. M/s Arcane Developers Private Limited, New Delhi

CO 376/DEL/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7423 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIMRAN MEHTA
• Assessee Lawyers: UMESH CHANDRA
• Keywords: Business income
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA ITA NO. 4635/DEL/2010 ASSESSMENT YEAR: 2007-08 ARCANE DEVELOPERS PVT. LTD., VS. INCOME-TAX OFFICE R, 11 TH FLOOR, NARAIN MANZIL, WARD 2(1), 23-BARAKHAMBA ROAD, NEW DELHI. NEW DELHI. (PAN: AAFCA7575C) (APPELLANT) (RESPONDENT) CROSS OBJ. NO. 376/DEL/2010 ( IN ITA NO. 4635/DEL/2010 ) ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, VS. ARCANE DEVELOPERS PVT. L TD., WARD 2(1), 11 TH FLOOR, NARAIN MANZIL, NEW DELHI. 23-BARAKHAMBA ROAD, NEW DELHI. (PAN: AAFCA7575C) (APPELLANT) (RESPONDENT) IN ITA NO. 5471/DEL/2010 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, VS. ARCANE DEVELOPERS PVT. L TD., WARD 2(1), 11 TH FLOOR, NARAIN MANZIL, NEW DELHI. 23-BARAKHAMBA ROAD, NEW DELHI. (PAN: AAFCA7575C) (APPELLANT) (RESPONDENT) APPELLANT BY: SIMRAN MEHTA, ADV. RESPONDENT BY: SHRI UMESH CHANDR A, SR.DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS-APPEALS BEFO RE US AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 10.09.2010 PASS ED FOR ASSESSMENT YEAR 2 2007-08. THE REVENUE ON RECEIPT OF NOTICE, IN THE A PPEAL OF ASSESSEE, HAS FILED CROSS-OBJECTION BEARING NO. 376/DEL/2010. 2. FIRST, WE TAKE UP THE APPEAL OF REVENUE I.E. ITA NO.5471/DEL/ AND ITS CROSS-OBJECTION BEARING NO.376/DEL/2010. THE SOLITA RY SUBSTANTIAL GROUND OF APPEAL PROJECTS THE GRIEVANCE OF THE REVENUE AS UND ER: 1. THE LEARNED CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEES BUSINESS WAS SET UP AND ALLOWING THE ASSESSEES CLAIM OF RS.1,26,64,315 U/S. 36(1)(III) OF THE I.T. ACT, AS INTEREST EXPENSES AND ON SIMILAR GROUNDS ALSO DELET ING OTHER DISALLOWANCE OF RS.2,32,,582 IGNORING THAT AS PER D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAMARAJU SURGICAL COTT ON MILLS LTD. (63 ITR 478) A UNIT CANNOT BE SAID TO HAVE BEEN SET UP UNLESS IT IS READY TO DISCHARGE THE FUNCTION FOR WHICH IT IS BEING UP SET . RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE OF S.P.V. BANK LTD. VS. CIT (126 ITR 773). 3. IN THE CROSS-OBJECTION, THE REVENUE HAS TAKEN A SIMILAR GROUNDS OF APPEAL. THEREFORE, WE TAKE UP BOTH THESE GROUNDS TO GETHER. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE C OMPANY HAS FILED ITS RETURN OF INCOME ON 23 RD OCTOBER, 2007 DECLARING A LOSS OF RS.31,75,090. TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND A NOTICE UNDER 3 SECTION 143(2) DATED 16.9.2008 WAS ISSUED TO THE AS SESSEE WHICH WAS DULY SERVED UPON IT. IN RESPONSE TO THE NOTICE, SHRI SHR IDHAR DHABEKAR, CA APPEARED BEFORE THE ASSESSING OFFICER. THE ASSESSEE COMPANY WAS INCORPORATED ON 4.8.2005 UNDER THE INDIAN COMPANIES ACT, 1956. IN THE MEMORANDUM OF ASSOCIATION, IT HAS BEEN INCORPORATED THAT MAIN OBJECTS OF THE ASSESSEE COMPANY ARE TO CARRY ON THE BUSINESS A S OWNER, SUPPLIER, COLONIZER, DEVELOPERS, PROMOTERS, PROPRIETORS ETC. AND TO DEAL ALL KIND OF IMMOVEABLE PROPERTIES WHETHER BELONGING TO THE COM PANY OR NOT .ETC. FOR ASSESSMENT YEAR 2006-07, WAS THE FIRST ASSESSME NT YEAR AND THE COMPANY HAS FILED ITS RETURN OF INCOME ON 29.11.2006 DECLAR ING A BUSINESS LOSS OF RS.6,.612. THE COMPANY HAS ENTERED INTO A MEMORANDU M OF UNDERSTANDING ON 31.3.2006 WITH TWO OTHER PARTIES, NAMELY, VIPUL LIMITED AND SHRI VARDHAMAN HOUSING BUILDING PVT. LTD. THIS MEMORANDU M OF UNDERSTANDING WAS CONVERTED INTO A JOINT CONSTRUCTI ON AND DEVELOPMENT AGREEMENT ON 15.7.2006. IT WAS EXECUTED BETWEEN THE ASSESSEE, M/S. VIPUL LIMITED AND M/S. VARDHAMAN HOUSING BUILDING PVT. LT D. THE JOINT VENTURE AGREEMENT WAS ENTERED FOR THE PURPOSE OF CONSTRUCTI ON, DEVELOPMENT, MANAGEMENT AND SALE OF AN INDUSTRIAL/I.T. PARK AT M OHALI IN THE STATE OF PUNJAB. ACCORDING TO THE ASSESSEE, IT HAS RECEI VED PROPOSAL FROM OVERSEAS INVESTORS TO PARTICIPATE IN THE DEVELOPMENT OF REAL ESTATES PROJECTS IN INDIA 4 AND ON THE STRENGTH OF THOSE PROPOSALS, IT HAS ENTE RED INTO THE MEMORANDUM OF UNDERSTANDING WHICH WAS CONVERTED INTO A JOINT V ENTURE DEVELOPMENT AGREEMENT. AS PER THE MEMORANDUM OF UNDERSTANDING, THE ASSESSEE WAS REQUIRED TO ARRANGE FUNDS WHICH WERE TO BE USED FOR ACQUIRING THE PROJECTS. THE ASSESSEE ARRANGED A SHORT TERM LOAN OF RS. 25 C RORES FROM M/S. DHARTI INVESTMENT LTD. IN THE JOINT CONSTRUCTION AND DEVEL OPMENT AGREEMENT, A NOMINEE OF THE ASSESSEE WAS APPOINTED ON THE BOARD OF PROJECTS AS A DIRECTOR AND SIGNATORY TO THE BANK ACCOUNT TO BE OPERATED BY THIS PROJECT. THE LOAN TAKEN FROM M/S. DHARTI INVESTMENT WAS RETURNED OUT OF SHARE CAPITAL MONEY ETC. RECEIVED BY THE JOINT VENTURE. THE ASSESSEE CL AIMED INTEREST EXPENSES AS A DEDUCTION. LEARNED ASSESSING OFFICER HAS DISALLO WED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT BUSINESS OF THE ASSESSE E WAS YET IN THE PROCESS OF BEING SET UP. ACCORDING TO THE ASSESSING OFFICER, T HE BUSINESS WOULD BE CONSIDERED AS SET UP WHEN IT IS IN SUCH A POSITION THAT IT CAN DELIVER THE RESULT IMMEDIATELY. LEARNED ASSESSING OFFICER MADE REFERE NCE TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RAMA RAJU SURG ICAL COTTON MILLS LTD. REPORTED IN 63 ITR 478. HE ALSO MADE REFERENCE TO T HE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF WESTERN INDIA VEGE TABLE PRODUCTS LTD. REPORTED IN 26 ITR 151 AND THE ORDER OF THE ITAT IN THE CASE OF JCIT VS. SARDAR SAROVER NARMADA NIGAM LTD. REPORTED IN 93 IT D 321. LEARNED 5 ASSESSING OFFICER ACCORDINGLY DID NOT ALLOW THE DED UCTION OF INTEREST EXPENSES AND MADE AN ADDITION OF RS.1,26,64,315. SI MILARLY, HE DISALLOWED A SUM OF RS.2,32,582 WHICH WAS CLAIMED BY THE ASSESSE E TOWARDS EXPENSES INCURRED ON AUDIT FEE, TRAVELING EXPENSES, STATUTOR Y FILING FEES ETC. 5. DISSATISFIED WITH THE DISALLOWANCES, ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY . IT WAS CONTENDED BY THE ASSESSEE THAT LEARNED ASSESSING OFFICER HAS MISREA D THE FACTS ON THE RECORD. ACCORDING TO THE ASSESSEE, THE MAIN ACTIVITY OF THE ASSESSEE COMPANY IS TO FINANCE THE PROJECT THROUGH SPECIAL PURPOSE VEHICLE S (HEREINAFTER REFERRED TO SPV) TO OTHER LOCAL COMPANIES FOR BUYING LAND MORE THAN 100 ACRES OR BRINGING OTHER LICENSES FROM THE GOVERNMENT DEPARTM ENTS. ACCORDING TO THE ASSESSEE, 75.39 ACRES OF PROJECT LAND WAS ACQUIRED BY THE JOINT CONSTRUCTION DEVELOPMENT AGREEMENT WHICH TOOK GOVERNMENTS APPRO VAL ETC. HENCE, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT SET UP THE BUSINESS. THE ASSESSEE PUT RELIANCE UPON THE FOLLOWING JUDGMENTS: (I) CIT VS. ESPN SPFTWARE INDIA (P) LTD. (2009) 18 4 TAXMAN 452 (DEL.); (II) CIT VS. HUGHES ESCORT COMMUNICATIONS (2007) 16 5 TAXMAN 318 (DEL.); 6 (III) CIT VS. WHIRLPOOL OF INDIA LTD. (2009) 185 TAXMAN 3 87 (DEL.); (IV) M/S. TETRON COMMERCIAL LTD. VS. CIT (2003) 133 TAXM AN 781 (CAL.); (V) CIT VS. LG ELECTRONICS (INDIA) LTD. (2005) 149 TAXM AN 168 (DELHI); (VI) CIT VS. SARABHAI MANAGEMENT CORPN. LTD. 192 ITR 151 (S.C). 6. LEARNED CIT(APPEALS) HAS MADE AN ANALYSIS OF SEC TION 36(1)(III) IN THE LIGHT OF THE FACTS PRESENTED BY THE ASSESSEE. L EARNED FIRST APPELLATE AUTHORITY ARRIVED AT A CONCLUSION THAT THE BUSINESS OF THE ASSESSEE WAS DULY SET UP AND THE EXPENSES WERE INCURRED IN CONNECTION WITH ITS BUSINESS. THE ASSESSEE TOOK THE LOAN WHICH WAS INTEREST BEARING. THE LOAN AMOUNT WAS USED FOR THE PURPOSE OF THE BUSINESS AND, THEREFORE , EXPENSES DESERVES TOBE ALLOWED. 7. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVE, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE SOLE QUESTION FOR OUR ADJ UDICATION IS WHETHER THE ASSESSEE HAS SET UP THE BUSINESS AND IT HAS USED TH E BORROWED FUNDS FOR THE PURPOSE OF ITS BUSINESS. CONSEQUENTLY, THE INTEREST EXPENSES DESERVE TO BE ALLOWED TO THE ASSESSEE OR NOT. THE CASE OF THE ASS ESSING OFFICER IN BRIEF IS THAT A BUSINESS IS TO BE CONSTRUED AS SET UP WHEN I T WAS ESTABLISHED AND WAS READY TO COMMENCE. IN CASE, IT WAS NOT READY FOR CO MMENCEMENT, IT COULD 7 NOT BE SAID TO HAVE BEEN SET UP. ACCORDING TO HIM, THE ASSESSEE COMPANY WAS NOT READY TO DISCHARGE THE FUNCTIONS IN WHICH IT WA S INCORPORATED AS MENTIONED IN ITS MEMORANDUM AND ARTICLE OF ASSOCIAT ION. WHEREAS THE CASE OF THE ASSESSEE IS THAT IN THE MEMORANDUM OF ARTICL E OF ASSOCIATION, THE MAIN OBJECT OF THE ASSESSEE COMPANY HAS BEEN PROVID ED AS TO CARRY ON THE BUSINESS AS A OWNER, BUILDER, COLONIZER, DEVELOPER, PROMOTERS OF THE PROPERTIES. IN ORDER TO RESOLVE THE CONTROVERSY, ONE HAS TO LOOK IN WHETHER ASSESSEE HAS TAKEN ACTIVE STEPS FOR FULFILLMENT OF ITS OBJECTS PROVIDED IN THE MEMORANDUM OF ARTICLE ASSOCIATION, THE ASSESSEE HAD ENTERED INTO A JOINT CONSTRUCTION AND DEVELOPMENT AGREEMENT WITH TWO MOR E COMPANIES ON 5.7.2006. THE JOINT VENTURE WAS IN THE PROCESS OF A CQUIRING LAND AND GOVERNMENT APPROVALS. IT REQUIRED FUNDS. ACCORDING TO THE MEMORANDUM OF UNDERSTANDING, ASSESSEE HAS TO PROVIDE THE FUNDS FO R FULFILLMENTS OF THE OBJECTS OF THE JOINT VENTURE. IT HAS ARRANGED THE L OAN AND THE JOINT VENTURE WAS ABLE TO ACQUIRE THE LAND MEASURING 75 ACRES. TH E SEQUENCE OF EVENTS SUGGEST THAT ASSESSEE HAS TAKEN ACTIVE STEPS IN ACC ORDANCE WITH ITS MEMORANDUM AND ARTICLE OF ASSOCIATION. THE CONTROVE RSY CAN BE EXPLAINED WITH THE HELP OF A SIMPLE EXAMPLE, NAMELY, A PERSON WANTS TO RUN BUSINESS OF TAXI OPERATORS. HE PURCHASED THE TAXI, PARKED IT ON A TAX STAND BUT WAS UNABLE TO GET THE PASSENGERS. WHETHER HIS BUSINESS OF A T AXI OPERATOR HAS BEEN SET 8 UP OR NOT? IN OUR UNDERSTANDING, HIS BUSINESS OF TA X OPERATION HAS BEEN SET UP BECAUSE HE WAS IN A POSITION TO DELIVER THE RESULTS . IT IS A IRRELEVANT FACTOR THAT CUSTOMERS HAD APPROACHED HIM OR NOT. IN THE PR ESENT CASE ALSO, THE MOMENT IT ENTERED INTO THE JOINT VENTURE AGREEMENT AND ARRANGED THE FUNDS FOR FULFILLMENT OF THE OBJECTS OF THE JOINT VENTURE WOULD SUGGEST THE BUSINESS WAS SET UP. LEARNED ASSESSING OFFICER HAS FAILED T O CONSTRUE THE FACTS IN RIGHT PERSPECTIVE. 8. THE SECOND ASPECT IS WHETHER INTEREST EXPENSES A RE TO BE ALLOWED AS A DEDUCTION OR NOT. SECTION 36(1)(III) PROVIDES AS UN DER: 36(1) THE DEDUCTIONS PROVIDED FOR THE FOLLOWING CL AUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREI N, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 - X X X X X X X X X X X (III) THE AMOUNT OF THE INTEREST PAID IN RESPECT OF CAPIT AL BORROWED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION: PROVIDED THAT ANY AMOUNT OF THE INTEREST PAID, IN RESPECT O F CAPITAL BORROWED FOR ACQUISITION OF AN ASSET FOR EX TENSION OF EXISTING BUSINESS OR PROFESSION (WHETHER CAPITALIZE D IN THE 9 BOOKS OF ACCOUNT OR NOT); FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED FOR ACQUISIT ION OF THE ASSET TILL THE DATE ON WHICH SUCH ASSET WAS FIRST P UT TO USE, SHALL NOT BE ALLOWED AS DEDUCTION. 9. IT SUGGESTS THAT MONEY OR THE CAPITAL MUST HAVE BEEN BORROWED BY THE ASSESSEE. IT MUST HAVE BEEN BORROWED FOR THE PURPOS E OF THE BUSINESS AND INTEREST MUST HAVE BEEN PAID ON THE BORROWED AMOUNT THEN DEDUCTION IN RESPECT OF SUCH INTEREST EXPENSES WOULD BE ALLOWED TO THE ASSESSEE. THOUGH LEARNED ASSESSING OFFICER HAS NOT ADVANCED ANY REA SON FOR DISALLOWANCE ON THIS COUNT. HE SIMPLY DISALLOWED BECAUSE BUSINESS W AS NOT SET UP WHICH WOULD INDICATE THAT BORROWED FUNDS WAS NOT USED FOR THE PURPOSE OF THE BUSINESS. IN THE FOREGOING PARAGRAPH, WE HAVE OBSER VED THAT BUSINESS WAS SET UP, CONSEQUENTLY, INTEREST EXPENSES INCURRED ON THE BORROWED FUNDS FOR THE PURPOSE OF BUSINESS AND USED FOR THE PURPOSE OF THE BUSINESS IS TO BE ALLOWED. LEARNED FIRST APPELLATE AUTHORITY HAS MADE A LUCID ANALYSIS ON THIS ISSUE AND REPRODUCED THE CONTENTIONS RAISED BY THE ASSESSEE. AFTER TAKING INTO CONSIDERATION THE DETAILED REASONED ORDER OF LEARNED CIT(APPEALS), WE DO NOT WISH TO INTERFERE IN HER FINDING. 10 10. THE NEXT ISSUE INCORPORATED BY THE REVEN UE IN THE FIRST GROUND OF APPEAL IS THAT THE LEARNED CIT(APPEALS) HAS ERRED I N DELETING THE DISALLOWANCE OF RS.2,32,582. THIS AMOUNT RELATES TO AUDIT FEES, TRAVELING EXPENSES, STATUTORY FILING FEE ETC. THIS WAS DISALL OWED TO THE ASSESSEE ON THE GROUND THAT BUSINESS WAS NOT COMMENCED. SINCE IN TH E FOREGOING PARAGRAPHS, WE HAVE HELD THAT BUSINESS WAS SET UP A CCORDINGLY, ALL NECESSARY EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS DESER VE TO BE ALLOWED. LEARNED CIT(APPEALS) HAS CONSIDERED THIS ASPECT AND THEREAFTER DELETED THE DISALLOWANCE. WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(APPEALS). 11. IN THE RESULT, GROUND OF APPEAL AS WE LL AS GROUND OF CROSS-OBJECTION TAKEN BY THE REVENUE ARE DE VOID OF ANY MERIT, THEY ARE REJECTED. CONSEQUENTLY, THE APPEAL AS WELL AS CROSS-OBJECTION OF THE REVENUE ARE DISMISSED. 12. IN THE ASSESSEES APPEAL, THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LEARNED CIT(APPEALS) HAS ERRED IN TREATING THE INTEREST INCOME OF RS.97,22,805 RECEIVED FROM SHORT TERM FIXED DEPOSIT S AS INCOME FROM OTHER 11 SOURCES AGAINST THE CLAIM OF ASSESSEE THAT THE SAME BE TREATED AS INCOME FROM BUSINESS. 13. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE RECEIVED SUBSCRIPTION TOWARDS SHARE CAPITAL FROM THREE FOREI GN AS WELL AS TWO DOMESTIC INVESTORS WHO JOINED HANDS TO PARTICIPATE IN THE DEVELOPMENT OF INDUSTRIAL I.T. PARK PROJECT AT MOHALI UNDER THE JO INT VENTURE. IN ORDER TO EXERCISE CONTROL ON THE USE OF THE FUNDS MEANT FOR PROJECT, THE ASSESSEE DID NOT PAY THE TOTAL AMOUNT RECEIVED FROM INVESTORS TO THE DEVELOPMENT PARTNERS AT ONE GO. THE FUNDS WERE RELEASED ONLY AFTER THE D ETAILS FOR PURCHASE OF PROJECT LAND WAS NEGOTIATED BY THE DEVELOPMENT PART NERS AND APPROVED BY THE ASSESSEE. THE SURPLUS FUND WAS KEPT IN THE FIXE D DEPOSIT WHICH GIVE RISE TO INTEREST INCOME. THE ASSESSEE CLAIMED THAT INTER EST INCOME SO EARNED BY IT, IS TO BE ASSESSED AS A BUSINESS INCOME. LEARNED AS SESSING OFFICER HAS HELD THAT INTEREST INCOME FROM SURPLUS FUNDS IS TO BE AS SESSED AS A INCOME FROM OTHER SOURCES. LEARNED ASSESSING OFFICER PUT RELIA NCE UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. REPORTED IN 227 ITR 172. 12 14. DISSATISFIED WITH THE ORDER OF THE ASSESSING OF FICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(APPEALS ). IT CONTENDED THAT IF THE ASSESSEE HAS FUNDS WHICH ARE DERIVED FROM BUSIN ESS AND WHICH ARE USED ONLY FOR BUSINESS AND IF THEY ARE SURPLUS, DEPOSITE D IN BANK, THEN INTEREST INCOME IS TO BE ASSESSED AS A BUSINESS INCOME BECAU SE THE FUNDS HAVE A DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE. LEA RNED CIT(APPEALS) DID NOT FIND FORCE IN THE CONTENTIONS OF THE ASSESSEE. 15. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS REITERATED HIS SUBMISSIONS AS WERE RAISED BEFORE THE LEARNED CIT(A PPEALS). HE MADE REFERENCE TO THE DECISIONS OF THE HON'BLE DELHI HIG H COURT IN THE CASE OF CIT VS. KOSHIKA TELECOM LTD. REPORTED IN 287 ITR 479, S ANAM PROGETTI SPA VS. ADDITIONAL CIT REPORTED IN 132 ITR 70, CIT VS. LOCK HOLDINGS REPORTED IN 189 TAXMAN 452 AND SUBMITTED THAT INTEREST INCOME B E ASSESSED AS A BUSINESS INCOME. ON THE OTHER HAND, LEARNED DR RELI ED UPON THE JDUGMETN OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICOR IN ALKASLIS CHEMICALS & FERTILIZERS AS WELL AS UPON THE ORDER OF THE LEARNE D CIT(APPEALS). 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY THE ASSESSEE HAS NOT DEMONSTRATED AS TO H OW IT HAS UNDERTAKEN THE 13 BUSINESS OF LENDING MONEY OR ETC. IN AN ORGANIZED M ANNER WHICH CAN SUGGEST INTEREST INCOME FROM A BUSINESS ACTIVITY. IT HAS SI MPLY SURPLUS FUNDS WHICH WERE DEPOSITED IN THE FIXED DEPOSIT DURING THE PERI OD WHEN SUCH FUNDS WERE NOT REQUIRED. THE CASE OF THE ASSESSEE DULY FALL WI THIN THE AMBIT OF PROPOSITIONS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALIS CHEMICALS & FERTILIZERS PVT. LTD. (SUPRA) AND LEARNED ASSESSING OFFICER HAS RIGHTLY HELD THAT SUCH INCOME IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. ACCORDINGLY, WE DO NOT H AVE ANY MERIT IN THE GROUND OF APPEAL RAISED BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS DISMISSED. 17. IN THE RESULT, BOTH THE APPEALS AS WELL AS CROS S OBJECTION ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 22.06.2012 SD/- SD/- ( SHAMIM YAHYA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/06/2012 MOHAN LAL 14 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR