TaxTMI 
TaxTMI 
2018 (2) TMI 1459
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce made by the AO on account of excess claim of remuneration to the partners claimed for Rs. 1,37,629." 2. During the course of assessment proceedins, the AO noted that the assessee has shown a sum of Rs. 2,29,381/- interest from FDRs with SBI which was taken into account for calculation of remuneration to the partners. The AO was of the view that interest of FDR is not a business income but it is income from other sources, therefore, excess remuneration was allowed to the partners on this account. Accordingly, the AO made a disallowance of Rs. 1,37,629/- on this account. The assessee challenged the action of the AO before the ld. CIT(A) and submitted that the assessee firm is engaged in the business of trading and commission agency of f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee dealing in food grains, oil seeds and pulses etc is a seasonal business depending upon crop seasons. Therefore, during the non harvesting season the assessee is not having much business activity and accordingly the funds which are otherwise required for the business activity has to be kept in the bank. Further, it is also not disputed by the AO that some of the FDRs were taken by the assessee to avail overdraft facility from the Bank for the purpose of business activity during the pick season of crops. The ld. CIT(A) decided this issue in para 5.3 is as under:- "5.3 I have considered the order passed by the A.O and submissions filed by the appellant. The moot question in the case is whether the income earned on FDRs whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... business of the assessee-company. Interest was earned out of such monies accruing from the business of the assessee-company and the same was also utilised for the purpose of business. This is not a case where the assessee did not have a running business during the assessment year. 7. The advocate appearing for the respondent relied upon a judgment of the Division Bench of this Court in the case of CIT v. Paramount Premises (P.) Ltd.[1991] 190 ITR 259 . The facts of Paramount Premises (P.) Ltd.'s case (supra) were almost similar to the facts before us. The assessee in that case had received deposits in instalments from prospective purchasers while the work of construction was in progress. If the purchasers failed to make deposi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n in that case was completely different than the fact situation in the present case. The assessee in the case before the Supreme Court was not in the business of construction. The interest receipts had been utilised towards creation of capital assets. The said judgment is not relevant for deciding the present matter. Lastly, the advocate for the assessee brought to our notice, a more recent judgment of the Division Bench of this Court in the case of Shree Krishna Polyster Ltd. v. Dy. CIT[2005] 274 ITR 21. In that case, the assessee-company was engaged in the business of manufacturing of synthetic yarn. The assessee received surplus money in public issue of shares and the said money was invested in bank deposits for a period of 45 days. In t....