Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 1993-94 - Assessee-company was engaged in business of real estate - Pursuant to an agreement, assessee received certain sum from its co-developers - Said money was kept in fixed deposit with bank - Interest earned on said fixed deposit was claimed by assessee as business income - Assessing Officer rejected claim of assessee on ground that interest income could not be said to be incidental to real estate business, since it arose out of investment of surplus fund and could be brought to tax as income from other sources - Commissioner (Appeals) relying upon its order for previous assessment years held in favour of assessee - Tribunal held that in absence of any material change in facts of case, view taken for earlier years could not be disturbed - Whether Tribunal was justified in holding so - Held, yes FACTS The assessee-company was engaged in the business of the real estate. The assessee entered into an agreement with 'E' and took over the responsibi-lity of re-development of land owned by the said company. The assessee also entered into agreement with 'B' and with 'A' (co-developers) and received amount from the said firms subject to certain conditions stipulated in the agreements. For the assessment year 1993-94, the Assessing Officer called upon the assessee to explain why the interest income including the interest amount earned on fixed deposits be not treated as income earned from other sources. The assessee replied that it was following the project completion method of accounting as was adopted in the earlier years, hence, the interest amount in question should be taken as its income from the business. The Assessing Officer held that the interest income could not be said to be incidental to the real estate business, since it arose out of investment of surplus funds and could be brought to tax as income from other sources. The Assessing Officer, accordingly, added said sum earned on FDRs to the income of the assessee. On appeal, the Commissioner (Appeals) relying upon the order passed for the previous assessment years, deleted the addition holding that the interest…

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