Business income treatment of interest receipts from surplus funds upheld; no substantial question of law arose for appeal admission.

Delay in filing the appeal was condoned on sufficient cause. Interest earned on surplus business funds through loans, short-term bank deposits and allied receipts was treated as business income, and that finding was accepted for deduction consideration under section 80HHC because no illegality, irregularity or substantial question of law was shown. The appeal was therefore not admitted and stood dismissed, while the assessee succeeded on the tax treatment of the interest receipts.

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Issues: (i) Whether delay in filing the appeal should be condoned. (ii) Whether interest earned on loans, short-term bank deposits and allied receipts arising from surplus business funds was assessable as business income and could be taken into account for deduction under section 80HHC of the Income-tax Act, 1961.

Issue (i): Whether delay in filing the appeal should be condoned.

Analysis: The Court found sufficient cause for the delay and allowed the application for condonation.

Conclusion: The delay was condoned in favour of the appellant.

Issue (ii): Whether interest earned on loans, short-term bank deposits and allied receipts arising from surplus business funds was assessable as business income and could be taken into account for deduction under section 80HHC of the Income-tax Act, 1961.

Analysis: The Tribunal had treated the interest receipts as arising during the course of the assessee's business and as assessable under the head of business income. It was held that no illegality or irregularity had been shown in that finding and that no substantial question of law arose for admission of the appeal.

Conclusion: The interest receipts were treated as business income and the claim for consideration under section 80HHC was upheld in favour of the assessee.

Final Conclusion: The appeal was not admitted and stood dismissed, while the assessee succeeded on the treatment of the interest receipts for income-tax purposes.

Ratio Decidendi: Where interest receipts are found to arise from surplus funds generated in the course of the assessee's business, their assessment as business income will not give rise to a substantial question of law warranting appellate interference.

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