GOA CARBON LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under s. 256(1) of the IT Act, 1961(`the Act'), the Tribunal has referred the following two questions of law to this Court for its opinion:

(2.) THE relevant facts having bearing on this reference are briefly summarised as under: THE assessee-company was incorporated as a company to manufacture calcined petroleum coke. During the relevant year, the assessee invited the public to participate in the share capital of the assessee. THEre was a considerable response to the issue. THE issue was heavily subscribed. THE assessee got share money to the extent of about 55 times. Pending consideration of allotment of shares, the assessee deposited excess subscription money with the bank and earned interest. THE first question before the Court is regarding taxability of above-referred income from interest. THE second question is in respect of deductibility of share issue expense from above-referred income from interest. THE Tribunal held that the income of the assessee from interest on the above- referred amounts deposited with the bank was liable to be assessed under the head `Income from other sources'. THE learned counsel for the assessee has not seriously contested this part of the finding of the Tribunal, and rightly so. It was mentioned in the director's report of the company for the relevant year, being report dt. 21st Nov., 1974, that the company's project was still at the stage of construction and actual production had not started. It appears that the business of the assessee was not even set up at the relevant time. We are satisfied that the Tribunal was right in coming to the conclusion that the above-referred income from the interest could not be classified as income from business but was liable to be classified as `Income from other sources'.

(3.) NO order as to costs.