Commissioner of Income Tax vs Jatinder Singh Bhatia

After hearing learned counsel for the parties, the following substantial question of law is framed for consideration:- Whether the Income Tax Appellate Tribunal was right in holding that interest income earned by the Assessee on fixed deposits is to be treated as business income?

Filing of paper book is dispensed with.

There is no dispute about the fact that the Assessee had some surplus funds which were parked by way of fixed deposit receipts. The Assessee earned considerable amount of interest on these fixed deposits. 2. The Assessing Officer as well as the Commissioner of Income Tax (Appeals) considered the interest income earned by the Assessee as income from other sources while the Income Tax Appellate Tribunal considered it as business income for the purposes of computing deductions u/s 80HHC of the Income Tax Act, 1961.

Our attention has been drawn to a decision of this Court in Rishi Dev Batra Vs. Dr. (Mrs.) Anup Suri where it has specifically been held that if surplus funds are parked with a bank and interest is earned thereon, the interest can only be categorized as income from other sources. It has also been held that interest earned on fixed deposits for the purposes of availing of credit facilities from a bank will also be required to be treated as income from other sources.

Following the view taken by this Court, it has to be held that the interest income earned by the Assessee is required to be treated as income from oilier sources.

The question of law is accordingly answered in the negative, in favour of the Revenue and against the Assessee. The interest income earned by the Assessee will be treated as income from other sources. The Appeal is disposed of accordingly.