TaxTMI 
TaxTMI 
2019 (7) TMI 1370
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....ITAT has erred while referring the issue to the file of A.O., to exclude 90 % of 'net' interest income excess of interest received or paid provided there is direct nexus between interest earned and paid after establishing the fact that all the interest income except the interest on income tax is forming part of the profits of the business and not income from other sources ? (II) Whether the findings of the ITAT while restoring the issue of interest income to the file of the A.O. to exclude 90 % of 'net' interest income is valid in law ? (III) Whether in the facts and in the circumstances of the case, the ITAT is right in law in taking into account the 'interest on bank deposits', 'interest on inter-corporate deposits', '....
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....e Assessee apart from depreciation has to be excluded for the purpose of computing profits of the business under clause (baa) of Explanation to Section 80HHC, is right in law ? 3. From a perusal of the aforesaid substantial questions of law, it is apparent that the substantial questions (I), (II), (V), (VII) and (VIII) relate to the issue, namely, whether the finding of the ITAT that only 90% of the 'net income' from the transfer of the vessel and barge freight has to be excluded for the purpose of computing the profits of the business under clause (baa) of Explanation to Section 80HHC is right or not. The learned Counsel for the parties agree that these substantial questions of law be taken up for consideration together. Both the ....
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.... money market or short term deposit in favour of the banks for providing security for obtaining short term loans or as a deposit towards LC opening is one of the business activities of the Assessee and this had come for the scrutiny of the Tribunal for the Assessment Years 1967-68 to 1972- 1973 and it was held in favour of the Assessee that the interest income accrued therefrom is a business income. The record is very clear that there is no material to demonstrate the substantial change in the said view for years which were followed thereafter. It was after substantial consistent following of the said view, it appears that the Assessing Officer took a distinct and separate view thereby treating the interest income as income from other sou....
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....e interest income earned by the Respondent/ Assessee is an earning out of its business activity only, as it has direct nexus with the said amount of business activity. The interest received by the Respondent/Assessee is having direct or proximate relationship with their main business activity and as such, the same has to be treated as "business income". As stated earlier, the money of the company was used for making investment in the bank deposits or call money market or inter-corporate deposits with the objective for availing short term loans or for keeping deposits for the purpose of LC's and said money had always retained its character as business assets. In our opinion, the surplus money, unless and until it is pulled out totally fr....
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....submission made by Mr. Naniwadekar. Accordingly, we hold that the substantial question of law at (IV) is, in fact, required to be answered in favour of the Revenue and against the Assessee. However, despite this, there is no reason to disturb the order made by the ITAT in view of the factual findings which have been recorded therein. We are satisfied that even after answering the substantial question of law at (IV) in favour of the Revenue, on facts, there is no case made out to interfere with the order of the ITAT, on this aspect. 8. Finally, in so far as the substantial question of law at (VI) is concerned, again, there is no dispute that the issue stands covered by the ruling of the Full Bench of this Court in the case of The Commission....