TaxTMI 
TaxTMI 
2020 (11) TMI 649
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....sed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 23/03/2016 by the ld. Assistant Commissioner of Income Tax-16(1), Mumbai (hereinafter referred to as ld. AO). 2. The revenue has raised the following grounds of appeal. 1. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to treat the fixed deposit interest income under the head Income from Business & Profession instead of Income from Other Sources. 2. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) failed to appreciate that the assessee has itself described "interest on film loan" in Profit and Loss account separately which could be categorize....
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....s. 143(3) on 28/03/2014, determining total income at Rs. 61.28 lakhs. 2. Effective ground of appeal is about deleting the addition made by the AO under the head income from other sources. During the assessment proceedings, the AO found that the assessee had shown interest on fixed deposits under the head income from business. He directed it to explain as to why the interest income should not be taxed as income from other sources. After considering the submission of the assessee, he held that as per the Audit Report the nature of the business of the assessee consisted of distribution of films, production of films, film finance and media campaign, that the interest received from the deposits made with the bank was not a part and parc....
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....ceived for production of films, regional language films for restoration of various regional films as per policy of 11th 5-year plan, that various advances were received by it for the business purposes, that for production of such films adequate time was required, that there were lots of complications, activities and techniques related issues for production of films, that the advances received by it could not be utilised for that reason, that with a view to safeguard the advances the company decided to deposit the money with the banks, that a general approach for taxing interest income earned on fixed deposit as income from other sources could not become a prevailing force. He referred to the various deposits made by the assessee company and....
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....27 ITR72) and Sangam Power Generation (Income tax Appeal No.87of 2016,dtd.31.08.2017) of the Hon'ble Allahabad High Court. The Authorised Representative(AR) relied upon the order of the FAA and stated that there was direct link between the business of the assessee and the interest income, that the advances received from various governmental agencies were utilised in an efficient manner for a limited period. He relied upon the cases of Lok Holdings( supra). 5. We have heard the rival submissions and perused the material before us. We are of the opinion that considering the facts that assessee's business -production of films for Ministries of Government of India and various government departments-and the durations for which t....
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....ssessee cannot be assessed as Income from other sources. 5.1. Here, we would like to refer to the case of Lok Holdings(supra).Facts of the case are that the assessee was engaged in construction business and received monies from the purchasers of flats which it deposited with the bank. The AO assessed the interest income earned on money deposited with the bank as income from other sources. The FAA deleted the addition. The Tribunal on finding that the entire interest sprang from the business activity of the assessee and not out of any independent activity, held that the interest income received by the assessee was business income. Dismissing the appeal filed by the Department, the Hon'ble Bombay High Court held as under: "....th....