2003 (6) TMI 191

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....r mill. It declared the loss of Rs. 2,43,848 from such business. The assessee also earned interest income of Rs. 18,00,000 on IDBI Bonds. Assessee returned such income under the head "income from other sources". However, subsequently, the assessee raised the claim and requested the AO to treat the interest income from IDBI Bonds as business income. However, the AO held such income to be income from other sources. On appeal, the CIT(A) directed to assess the interest income as business income. The Revenue is in appeal before us. While relying on the decision reported as CIT vs. Govinda Choudhury & Sons (1994) 116 CTR (SC) 61 : (1993) 203 ITR 881 (SC), the learned Departmental Representative argued that the investment in IDBI Bonds was not th....

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....e investment in the IDBI Bonds was made to avail benefit of s. 54E. This fact will not make the interest income earned by the assessee as business income. We also do not find any substance in the submissions of the learned counsel to the effect that because the sale consideration of the commercial asset was invested into IDBI Bond, the income will partake the character of business income. If somebody goes by the logic of the counsel then if an assessee purchases house property from business income and gives the same on rent, the rent will partake the character of business income. But in law it is not so. We, therefore, restore the order of the AO by holding that the interest earned on the IDBI Bonds was taxable under the head "income from o....