TaxTMI 
TaxTMI 
2018 (12) TMI 1150
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also in the light of the principles laid down by the Hon'ble Supreme Court in Pandian Chemicals Ltd. v. C.I.T., [2003] 262 ITR 278, ought not the Tribunal have found the interest income earned by the assessee; from the fixed deposits for opening the letter of credits and for retention of margin money, to be income from other sources and not profits and gains of business ? II) Whether on the facts and in the circumstances of the case the assessee is entitled to set off the un-absorbed depreciation against the income from other sources ? 2. On facts suffice it to notice that the assessee is a ship building company, who inter-alia enters into contracts with foreign purchasers, for construction of sea going vessels. On such con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....non, learned Senior Counsel, Government of India (Taxes) would point out from K.Ravindranathan Nair that in a similar case of deposits made for opening of letters of credit, the Court found that it cannot be said to be a profit derived from exports. The position herein is identical, insofar as the assessee having claimed deposits made for opening letters of credit in the name of the foreign buyers. The assessee also has made deposits in pursuance of the contracts, the interest income of which is not a contract receipt and can only be considered as an income from other sources. Reliance is placed on Pandian Chemicals Ltd. to argue that in the case of deposits made before the Electricity Board; though power was a necessary requirement for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness, parked in fixed deposits, can be termed to be business income. The Supreme Court held that it can only be income from other sources. Here it is otherwise as we will presently demonstrate. Here, the benefit to the assessee is insofar as the present income by way of interest when treated as part of profits and gains of business, then depreciation is permitted to be set off as against such income. If not, as we earlier noticed, the depreciation cannot be set off as against income from other sources. 7. As has been pointed out by Sri.Raja Kannan, K.Ravindranathan Nair is on a totally different footing. Therein, Section 80HHC provided a deduction of the profits derived by the assessee from the export of goods and merchandise dealt with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction available to industrial undertakings in a backward area. As far as the present case is concerned, we are adjudicating upon which head the 'income' could be assessed to tax; whether it can be under profits and gains of business or income from other sources. We agree with the learned Senior Counsel that the interest income, does not change its character as interest, but however, for the purposes of assessment, one has to look at; which head it would fall under. 9. We turn to Govinda Choudhury, wherein the Hon'ble Supreme Court was concerned with a similar issue. Therein, the assessee had an arbitration award, which also granted interest. The Department took a stand that the interest as awarded by the Arbitrator would be....