2009 (5) TMI 22

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....f the judgment of a Division Bench of the Bomaby High Court reported in (2000) 163 CTR (Bom) 594 (Commissioner of Income Tax Vs. Punit Commercial Ltd.). So far as first point is concerned, appellant's contention is that from the recital of the judgment it can be seen that notice was served in the wrong address and as such the appellant failed to attend the proceeding when the order impugned was passed ex-parte only on the ratio of the judgment passed by the Delhi High Court reported in 289 ITR 475 (Del.) (CIT Vs. Sriram Honda Power Equipment), as referred by the tribunal in paragraphs 7 & 8 of the impugned judgment. Paragraph 7 & 8 are as follows: "7 The Revenue has preferred the present appeals against the aforesaid orders of the CIT....

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....to necessarily be treated as income from other sources and not business income." 8. With regard to the principle of netting the Court has held as follows: "Where, as a result of the computation of profits and gains of business and profession, the A.O. treats the interest receipt as business and profession, the AO treats the interest receipt as business income, then deduction should be permissible, in terms of Explanation (baa) of the net interest i.e. the gross interest less the expenditure incurred for the purposes of earning such interest. The nexus between obtaining thee loan and paying interest thereon (laying out the expenditure by way of interest) for the purpose of earning the interest on the fixed deposit, to drawn an analogy ....

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....urplus fund by the assessee as income from other sources. If we go by the order impugned before the tribunal, as pointed out by Mr. Agrawal, we see as follows: "I am inclined to agree with the submissions of the appellant that the interest income earned on bank deposits taken on the facts and circumstances of the case is incidental to the business of the appellant, which is 100 percent export. I had taken a view in the case of M/s Vrindavan Overseas, a sister concern of the appellant, in their appeal for Assessment Years 93-94, 94-95, 95-96, 97-98 and 2000-01 that interest income on bank FDRs taken and furnished to bank as security for availing Packing Credit and Other limits in its export business would be business income. I find that o....