LAWS(ALL)-2008-4-301

COMMISSIONER OF INCOME TAX Vs. JHUNJHUNWALA VANASPATI LTD.

Decided On April 24, 2008
COMMISSIONER OF INCOME TAX Appellant
V/S
JHUNJHUNWALA VANASPATI LTD. Respondents

JUDGEMENT

(1.) WE have heard Sri A.N. Mahajan for the appellant Department and Sri R.R. Agrawal for the respondent.

(2.) THE next question sought to be raised before us with regard to Tribunal deleting the addition of Rs. 5,725 on account of brokerage expenditure relating to earlier year, the issue stands concluded in favour of the assessee and against the Department by a decision of this Court in the case of Swadeshi Cotton Mill Co. Ltd. vs. CIT (1980) 15 CTR (All) 334 : (1980) 125 ITR 33 (All).

(3.) THE fourth question of law which has been sought to be raised in this appeal by the Department relates to the Tribunal's decision treating the interest income out of 'bridge loan' under the head 'Business income' instead of the head 'Income from other sources'. The facts recorded in the Tribunal's order indicate that the assessee had taken a loan of Rs. 2 crores from the State Bank of Rajasthan (sic) to finance its expansion plan. As the loan released by the bank could not be utilised immediately, therefore, the assessee as a prudent businessman temporarily invested the borrowed funds on which interest amounting to Rs. 3,44,843 was earned by the assessee as against the interest of Rs. 4,82,243 paid by the assessee on the borrowed money. Such temporary use of the borrowed funds by investing and earning interest according to the Tribunal was not an investment of a nature which would bring the interest income under the head 'Income from other sources'. The Tribunal has relied upon a decision of the Supreme Court in the case of Keshavji vs. CIT (1990) 82 CTR (SC) 123 : (1990) 183 ITR 1 (SC) and the case of India Cement vs. CIT (1966) 60 ITR 52 (SC). The Tribunal has also relied upon a decision of the Madras High Court in the case of CIT vs. Tamil Nadu Dairy Development Corporation Ltd. (1995) 216 ITR 535 (Mad).