2002 (9) TMI 74

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....?" The assessment years are 1989-90 and 1990-91. The assessee is a firm doing business in export of tanned and finished leather. It had obtained credit facilities from the overseas branch of the State Bank of India, Madras. The assessee had, in the same bank, made deposits to the tune of Rs. 139.14 lakhs, on which it received interest at the rate of 10 per cent. The assessee's claim that the interest received by it on those deposits should be treated as part of the income from business was negatived by the Assessing Officer as also by the Commissioner, but was upheld by the Tribunal. The assessee did not produce the letters from the bank sanctioning the various credit limits and facilities to support its claim that such facilities and....

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.... Commissioner has rightly pointed out that the deposits kept by the assessee in the bank in a large sum of over Rs. 130 lakhs were to the assessee's own advantage, inasmuch as they provided a return at the rate of 10 per cent. That was in the nature of an additional source of income to the assessee which was not in any way linked to the business that it was carrying on. The credit facilities enjoyed by the assessee from the bank had been extended to it by charging interest at a rate lower than the one which the assessee was receiving on its deposits. The assessee, therefore, had found it advantageous to borrow money from the bank and have those borrowed funds used in the business. The interest income that the assessee received on its own....

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....eing part of its business income. Learned counsel for the assessee submitted, placing reliance on certain observations made in the case of Brooke Bond and Co. Ltd. v. CIT [1986] 162 ITR 373 (SC), that even if a part of the business income is computed under a different head for the purpose of assessment, it would nevertheless retain the character of income from business and should be treated as such. Learned counsel relied on the observations of the court in that case that the mere circumstance that the assessee showed the dividend income under the head "Income from other sources" was not decisive of its true character and that it must be determined from the evidence whether having regard to the true nature and character of the income it ....