C.I.T.,Bhopal vs. M/S Siddharth Soya Products

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MAIT/87/2004HC Madhya Pradesh08 September 2014Author: HON'BLE SHRI JUSTICE RAJENDRA MENON3 pages
For Petitioner: B.S.Thakur,Sanjeev Tuli,Ajit Ade
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the Revenue's appeal and quashed the impugned order of the ITAT. The Court answered the substantial question of law in favour of the Revenue. The Court relied on the decision in M. P. State Industries Corporation Ltd. Vs. Commissioner of Income Tax (1968) 69 ITR 824 (MP), which held that interest on such deposits is taxable as income from other sources and not as business income. The Court also referred to a recent order by a co-ordinate bench in I. T. A. No. 238/12, which followed the same principle and set aside an identical finding of the ITAT. The Court found no reason to take a different view and held that income from interest earned by the assessee in the present case is taxable as income from other sources and cannot be considered as business income. The operative direction was to quash the impugned order of the Tribunal.

What were the facts?

This is an appeal by the Revenue under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT). The appeal has been pending for over 10 years. Notices were sent by registered post acknowledgment due on February 28, 2014, and were deemed served. The ITAT had held that income earned by the assessee from short-term deposits/loans is assessable under the head 'income from business and profit'. The assessee's primary business is the production and distribution of veg-oil and D-oiled cake from Soya bean.

What were the issues?

1. Whether the learned Tribunal was justified in holding that income earned by the assessee from short-term deposits/loans is assessable under the head 'income from business and profit' in the facts and circumstances of the case, particularly when the assessee's business is production and distribution of veg-oil and D-oiled cake from Soya bean? (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue argued that income from short-term deposits and loans is taxable as income from other sources and not as business income. The Revenue relied on the judgment of M. P. State Industries Corporation Ltd. Vs. Commissioner of Income Tax reported in (1968) 69 ITR 824 (MP) and a co-ordinate bench's order in I. T. A. No. 238/12 (M/s Bharat Oman Refineries Vs. Commissioner of Income Tax-I).

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1 M. A. I. T. No. 87/04 8/09/14 Shri Sanjay Lal, learned counsel for the appellant. None is appearing for the respondent and the appeal is pending for more than 10 years. Notices have been sent by registered post acknowledgment due on 28.02.14 and, therefore, it is deemed to have been served on them. This is revenue's appeal under Section 260-A of the Income Tax Act and the appeal has been admitted for considering the following substantial question of law :- “Whether the learned Tribunal was justified in holding that income earned by the assessee from short term deposits/loans is assessable under the head income from the business and profit in the facts and circumstances of the case particularly when the business of the assessee is production and distribution of veg-oil and D-oiled cake from Soya bean and sales there from ?” The Income Tax Appellate Tribunal having decided the 2 aforesaid issue by holding that the income earned by the assessee from short-term deposits and the loan is assessable a Co-ordinate Bench of this Court very recently on 29 th April, 2013 in I. T. A. No. 238/12 wherein after following the principles laid down in the case of Madhya Pradesh Industries Development Corporation (supra), it has been held by a Co-ordinate Bench of this Court that such a question actually had already been answered in favour of the revenue in the aforesaid case and, therefore, the identical finding of the Tribunal was quashed. We have gone through the findings of the Tribunal and 3 by a Co-ordinate Bench of this Court in the case of M/s Tax-I in I. T. A. No. 238/12 and we find that after referring to various judgments of the Supreme Court so also of the Bombay High Court, the order identical in nature of the Income Tax Appellate Tribunal has been set aside. Having considered the matter so, we do not find any reason to take a different view. Accordingly, we answer the reference by holding that income from interest by the assessee in the present case is taxable as income from other sources and cannot be considered from business. Accordingly, we answer the reference as indicated hereinabove.

The appeal stands allowed and the impugned order passed by the Tribunal is quashed. (Rajendra Menon) (Anil Sharma) J U D G E J U D G E Vy*

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