Case Law Details
R.G. Colonizers Pvt. Ltd. Vs DCIT (ITAT Jaipur)
Conclusion: Interest income on FDR which was earned out of the funds placed with the bank by utilizing the bank overdraft limit was to be considered as business income and not as income from other sources.
Held: Assessee had shown interest income of Rs.12,58,998/- on the FDR and miscellaneous receipts of Rs.2,89,200/-. AO assessed the same as income from other sources. CIT(A) confirmed the action of AO. It was held that the interest income earned on FDR was part of business income as FDRs’ were made for the purpose of business for giving bank guarantees to the awarder of contract. For this purpose assessee had to obtain the FDR from the bank which was pledged to it. Also, the FDR were made by utilizing the cash credit limit on which interest was paid to the bank and which formed part of the business expenditure. Thus, the interest income on such FDR which was earned out of the funds placed with the bank by utilizing the bank overdraft limit was to be considered as business income and not as income from other sources. Similarly, the miscellaneous receipts of Rs.2,89,200/- was from sale of scrap and was part of business income.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This is an appeal filed by the assessee against the order of ld.
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