Law:

Section:

Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Assessment year 1967-68 - Whether in absence of any evidence that amounts representing loans and advances had been given in course of assessee's business or that amounts were short-term deposits not for earning interest as such but for not keeping money idle, interest income received by assessee on such loans and advances was taxable as income from other sources - Held, yes FACTS The assessee claimed that interest received on loans and advances was taxable as income from business. The Tribunal, however, held that interest income was to be taken as income from other sources, inter alia, on the grounds (i) that the interest paid on borrowings was allowed as business expenditure and, therefore, those borrowings must have been used by the assessee for the purpose of its business; (ii) it inferred from the aforesaid fact that the monies available for advancing loans, thus, had or could have their sources in the assessee's own reserves and surpluses from the profits; and (iii) it may be taken on the basis of the Tribunal's order that the advances were mostly to the assessee's subsidiary companies and its other allied concerns. On reference : HELD It was for the assessee to place the material before the departmental authorities or the Tribunal to show that these monies on which the interest in dispute was earned were advanced in the course of the assessee's business or that the amounts advanced/lent were short-term deposits not for earning interest as such but for not keeping the money idle. The assessee had not placed any material of the kind before any of the authorities below. Therefore, the Tribunal rightly held that interest received on loans and advances were taxable as income from other sources. Note : The decision was in favour of Revenue. S.N. Dastur, Mulla and Mulla, Cragic, Blunt, Caroe and N.A. Dalvi for the Applicant. Dr. V. Balasubramaniam, P.S. Jetley and K.C. Sidhwa for the Respondent. JUDGMENT T.D. Sugla, J. - This is the assessee's reference. The assessment year involved is 1967-68, The Tribunal has referred to this court only one question of law under section 256(1)…

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