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2000 Supreme(SC) 412
SUPREME COURT OF INDIA
D.P. WADHWA AND M.B. SHAH, JJ.
Commissioner of Income-tax, Bombay, Appellant
VERSUS
Haribhai Estate Pvt. Ltd, Respondent.
Civil Appeal Nos. 6131-6132 of 1995, D/- 22-2-2000.
The central legal point established in the judgment is the classification of interest income as either business income or income from other sources under the Income-tax Act.
Headnote:
Income-tax Act - Assessment of Interest Income - Business Income vs. Income from Other Sources
Fact of the Case:
The Revenue filed an application under Section 256(2) of the Income-tax Act, 1961, seeking reference on questions related to the assessment years 1979-80 and 1980-81. The Tribunal had rejected the application filed under Section 256(1) of the Act.
Finding of the Court:
The Supreme Court found that the questions of law did arise from the order of the Income-tax Appellate Tribunal and directed the Tribunal to draw the statement of the case and refer the questions to the High Court for its opinion. The appeals were allowed with no order as to costs.
Issues: The issues revolved around the classification of interest income from fixed deposits, temporary loans, and arrears of sales deposits as either business income or income from other sources for the assessment years 1979-80 and 1980-81.
Ratio Decidendi: The court's decision was influenced by the interpretation of the Income-tax Act and the determination of whether the interest income should be considered as business income or income from other sources.
Final Decision: The Supreme Court allowed the appeals and directed the Income-tax Appellate Tribunal to refer the questions of law to the High Court for its opinion.
JUDGMENT :- These appeals are directed against the judgment of the Bombay High Court dated March 12, 1987 refusing the application of the Revenue filed under Section 256(2) of the Income-tax Act, 1961. Earlier the Income-tax Appellate Tribunal had rejected the application of the Revenue filed under Section 256(1) of the Act. The questions pertain to assessment years 1979-80 and 1980-81. The question on which reference was sought are as under :
"Assessment Year 1979-80
1. "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that interest of Rs. 1,09,753/- on fixed deposit interest of Rs. 6,16,356/- on temporary loans and interest of Rs. 9,52,315/- on arrears on sales deposit are to be considered as business income and not income from other sources?"
2. "Whether on the facts and in the circumstances of the case, and in law the Tribunal was right in holding that interest of Rs. 1,09,753/- on fixed deposit, interest of Rs. 6,16,356/- on temporary loans and interest of Rs. 9,52,315/- on arrears of sales deposit are not taxable under the head other sources?"
Assessment Year 1980-81
1. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Interest of Rs. 38,483/- on fixed deposit, interest of Rs. 9,03,465/- on temporary loans and interest of Rs. 11,69,621/- on arrears of sales deposits are to be considered as business income and not income from other sources?"
2. "Whether, on the facts and in the circumstances of the case, and in law, the Tribunal was right in holding that interest of Rs. 38,483/- on fixed deposit interest of Rs. 9,03,405/- on temporary loans and interest of Rs. 11,69,621/- on arrears of sales deposit are not taxable under the head other sources?"
2. After hearing learned counsel for the parties, we are of the view that the questions of law do arise from the order of the Income-tax Appellate Tribunal. Accordingly, we direct the Income-tax Appellate Tribunal to draw the statement of case and refer the aforesaid questions of law to the High Court for its opinion.
3. The appeals are allowed. There shall be no order as to costs.
Appeal allowed.
FOR CITATION AIR 2000 SC 3485
