Tax treatment of fixed deposit interest remanded for fresh review of business purpose and income characterisation.

Interest income from short-term fixed deposits had to be re-examined to determine whether it should be taxed as income from other sources or as business income. The Supreme Court set aside the impugned order and remanded the matter to the Assessing Officer for fresh consideration of the assessee's business purpose and the correct characterisation of the interest income. The decision leaves the tax treatment open for reassessment on the existing record and factual inquiry.

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Issues: Whether, for Assessment Year 2009-10, the issue of treatment of interest income from short-term fixed deposits as income from other sources or business income required reconsideration by the Assessing Officer.

Outcome: The impugned order was set aside and the matter was remanded to the Assessing Officer for fresh consideration of the assessee's business purpose and the treatment of interest income.

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