Interest from Deposits made out of Surplus Fund from Business Receipt is assessable as Business Income, not as ‘Other Income’: ITAT [Read Order]

Business Income

The Income Tax Appellate Tribunal in the case of ACIT vs. M/s. Agri Gold Constructions Pvt. Ltd. decided that interest from deposits made out of surplus funds from the business receipt is assessable as business income, not as ‘Other Income’.

The bench including Judicial Member V. Durga Rao and Accountant Member D.S. Sunder Singh was hearing an appeal filed by the Revenue.

Assessee in the instant case, filed its return of income declaring total income of Rs. 3,73,54,496/- wherein the Assessing Officer found that the assessee had a practice of offering interest income under the head business income`.

Assessee deposited his surplus fund received from the customers as deposits in banks for temporary period and earning interest income and accordingly assessee admitted the same as business income.

The Tribunal, on second appeal, found that the assessee’s own case for the assessment year 2010-11 held that the interest income on deposits made out of surplus funds from the business receipt for temporary periods is assessable under the income from business.

“The assessee has placed the surplus funds received from the customers as deposits in banks for temporary period and earning interest income. Hence, the interest income earned by the assessee is inter-related to the business activity carried on by the assessee. Accordingly, the assessee has admitted the same as business income. The issue of assessment of interest under the head business income was considered by this Tribunal in the assessee’s own case for the assessment year 2010-11 in ITA No.452/Vizag/2012 and held that the interest income on deposits made out of surplus funds from the business receipt for temporary periods is assessable under the income from business.”

The tribunal bench while relied on the above said decision ruled that the interest income received on deposits required to be assessed under the business income but not as separate source of income.

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