Commissioner Of Income Tax v. M/S Bazpur Cooperative Sugar Factory Ltd

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 281 of 2007 Commissioner of Income Tax. ………. Appellant Versus M/s Bazpur Cooperative Sugar Factory Ltd. ..………. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Ms. Puja Banga, Advocate for the respondent. JUDGMENT Coram: Hon’ble Barin Ghosh, C.J. Hon’ble U.C. Dhyani, J. BARIN GHOSH, C. J. (Oral) Assessee is a sugar mill. It was required to purchase sugarcane as raw material. Purchase price of sugarcane is fixed by the Government in respect of levy sugar. A price was fixed by the Government in respect thereof. That fixation was disputed. The Court directed the difference to be deposited in Fixed Deposit Accounts. Accordingly, Fixed Deposits were created. In respect of those Fixed Deposits, certain interest income was generated. The question was, whether the same should be treated as business income or income from other sources. 2. An income of interest has not been specified in Section 14 of The Income Tax Act, 1961 or in Items A to E thereto. Interest income is an income and, accordingly, in terms of Section 56 of the Act, should be deemed to be ‘income from other sources’. However, Section 56, itself, clarifies that income by way of interest on securities, if the income is not chargeable to income tax under the head ‘profits and gains of business or profession’, the same shall be treated as income from other sources. Having regard to the income being more proximate to the business of the assessee, the said income was treated, in the previous year, as income associated with business and, accordingly, chargeable to tax under the head ‘business and profession’. The same view has also been taken during the relevant year. We find no scope of interference therewith. 3. The other issue has been decided by a judgment of this Court dated 1[st] June, 2007, rendered in Income Tax Appeal No. 189 of 2005 and connected appeals, and, accordingly, following the said judgment, the said issue is answered against the appellant. 4. The appeal is, accordingly, disposed of. G (U.C. Dhyani, J.) (Barin Ghosh, C. J.) 11.12.2012 11.12.2012