Case Law Details
Habitate Realtech P. Ltd. Vs DCIT (ITAT Delhi)
When it is a fact on record that the business fund lying idle with the assessee was invested in fixed deposit for earning some income which can be utilised in the business at the time of need, it has to be held that the interest income is inextricably linked with the business of the assessee. The decision to invest the idle fund lying with the assessee in fixed deposit has to be accepted as a decision taken by a prudent businessman keeping in view the commercial expediency. It is not disputed that the assessee has temporarily parked its business fund in short term deposits varying between 3-9 months. When the need arises, assessee encashes the fixed deposits and utilises the funds for its business purpose. In the aforesaid scenario. it can not be said that the interest income is not inextricably linked with the business of the assessee. In this context I rely upon the decision of the Hon’ble Bombay High court in case of CIT vs Lok Holdings (supra). Therefore, in my view, the interest income earned on fixed deposits has to be treated as business income of the assesee. That being the case, it has to be set off against the revenue expenses. However this is only to the extent of interest income earned on fixed deposits.
Mutual Fund Income and Interest on Income Tax Refund is Taxable as ‘Other Income’
As far as income earned from mutual fund and interest from income tax refund, they have to be taxed under the head income from other sources.
FULL TEXT OF THE ORDER OF ITAT DELHI
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