PREMIER ENTERPRISES Vs. DEPUTY COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Aggrieved by the order passed by the Income Tax Appellate Tribunal in dismissing the appeal filed by it, the assessee is before this Court challenging the said order by filing the present appeal. This Court, vide order dated 09.08.07 admitted the appeal by framing the following substantial questions of law :-

(2.) The appellant/assessee is a 100% export oriented unit doing export business in cotton fabrics. For the assessment year 1994-1995, the assessee filed return of income on 31.10.94 and the same was processed under Section 143 (1) (a) of the Income Tax Act. It was noticed that the the assessee had made certain fixed deposit in banks and had treated the interest earned from the said deposit as business income and claimed deduction under Section 80 HHC of the Act. Therefore, the Assessing Officer excluded the interest earned out of those deposit from the head 'Business Income' and treated the same under the head 'Income from other sources' and recomputed the income under Section 80 HHC of the Act. Aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the CIT (Appeals).

(3.) The CIT (Appeals), allowed the appeal by treating the interest component earned from term guaranteed deposit and directed the Assessing Officer to treat the same as business income. Not being satisfied with the said order, the Department pursued the matter before the Tribunal.