TaxTMI 
TaxTMI 
2013 (6) TMI 129
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....as affirmed. The ITAT and CIT have confirmed addition of Rs.31,39,70,137/- to the total income on account of the interest earned on FDRs made out of zero coupon convertible bonds. The appellant has suggested that the appeal involves following substantial questions of law and on these substantial questions of law, this appeal may be admitted:- (i) Whether the Tribunal is correct in law in basing its finding on erroneous finding of AO about nexus of funds invested in FDR, and holding that interest which accrued on equity funds deployed with the Bank could be taxed as income from other sources and not as a capital receipt liable to be set off against pre operative expenses? (ii) Whether the Tribunal was correct in law in holding that the....
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....th the State Bank of Patiala and and ICICI Bank. This amount was subsequently re-vested in short term deposits with the State Bank of Patiala, Jammu & Kashmir Bank and Central Bank of India. On these fixed term deposits, with various banks for short period, the company had earned an interest at Rs.31,39,70,136.99. (v) The appellant had submitted its return of income for assessment year 2008-2009 (financial year 2007-08) on 25.8.2008. In the said return, the appellant had shown total income of Rs.43,91,84,655/- being interest earned on fixed deposits made out of borrowed funds and claimed that the sum of Rs.31,39,70,136.99 was taxable as income from business being as accretion to the capital of the appellant. The Assessing Officer, Deputy....
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....Para 5 of the judgment, this appeal may be admitted for final hearing. Shri Sanjay Lal, learned counsel appearing for revenue opposed the aforesaid contention and submitted that the controversy involved in this case is squarely covered by a judgment of Apex Court in Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CIT (1997) 227 ITR 172(SC) and a Division Bench judgment of this Court in M.P. State Industries Corporation Ltd. vs Commissioner of Income Tax reported as (1968) 69 ITR 824 (MP) and submitted that this appeal does not involve any substantial question of law as suggested by the appellant. Per contra, Shri Purohit, learned senior advocate submitted that there are divergent views of the Supreme Court as find place in Commissio....
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....ndustries Corporation (supra) held that the interest earned by investing the surplus share money in bank deposits, such interest is taxable as income from other sources and not as business income. The Division Bench of Bombay High Court in Shree Krishna Polyster Ltd (supra) have also considered the legal position and held that the interest on short term deposits with bank by investing surplus fund acquired in public issue invested in short term bank deposits did not spring or emanate from the business activity of the assessee, hence it cannot be considered as business income and is liable as income from other sources. The Bombay High Court considered all the judgments including the judgment in Tuticorin Alkali Chemicals & Fertilizers (supra....