TaxTMI 
TaxTMI 
TaxTMI 
1979 (2) TMI 58
X X X X Extracts X X X X
X X X X Extracts X X X X
....67. The short point involved is whether the interest income earned by the assessee-company was assessable as business income or as income from other sources. The assessee-company was, at the relevant period, the sole agent for wall clocks and timepieces manufactured by another company, viz., Sifco Ltd. Under an agreement dated 28th June, 1962, between Sifco Ltd. and the assessee-company, the assessee-company was appointed the sole selling agent of Sifco Ltd., for the territories comprised in the Union of India. The duration of the said agreement was for five years. The other terms of the agreement are not of any particular interest for our purposes, but it may be stated that the agreement does not contain any condition or stipulation to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imple reason that if interest income was taken under other sources, it could not be set off against its business losses which had been carried forward. Accordingly, an appeal was filed before the AAC, who, however, agreed with the ITO. The AAC also based his appellate order on the absence of any condition in the agreement regarding giving of any loans or advances or keeping any amount as deposit. The assessee then carried the matter in further appeal before the Income-tax Appellate Tribunal. Before the Tribunal, it was contended on behalf of the assessee that the advances given to Sifco Ltd., were in the course of carrying on the assessee's business and that the fact that there was no condition in the agreement between Sifco Ltd. and the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng them. It considered the nature of the advances, the reasons for the advances and the sources of the money from which advances were given; and taking an overall view of the entire transaction, it observed that this was not an investment of idle funds but advances made to a company in order to facilitate its manufacturing activities, in which activities the assesse was vitally interested. Accordingly, the Tribunal allowed the appeal and directed that the interest income should be assessed as business income. Mr. Pandit on behalf of the Commissioner has repeated the submissions which found favour with the ITO and the AAC. We, however, find that the approach adopted by the Tribunal to be found contained in para. 5 of its appellate order is ....