Law: Income Tax Act, 1961

Section: 256,28,56

Income-tax----Reference---Business---Other sources---Interest---Interest on fixed deposits, temporary loans and arrears of sales deposit--.ether income from business or from other sources---Question of law,--Indian Income Tax Act, 1961, Ss. 28, 56 & 256. Held, that the question whether interest on fixed deposit, interest on temporary loans and interest on arrears of sales deposit were to be considered as business income and not income from other sources was a question of law to be referred to the High Court. JUDGMENT These appeals are directed against the judgment of the Bombay High Court, dated March 12, 1987, refusing the application of the Revenue filed under section 256(2) of the Income Tax Act, 1961. Earlier the Income-tax Appellate Tribunal had rejected the application of the Revenue filed under section 256(1) of the Act. The questions pertain to the assessment years 1979-80 and 1980-81. The questions on which reference was sought are as under: Assessment year 1979-80: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that interest of Rs.1,09,753 on fixed deposit, interest of Rs.6,16,356 on temporary loans and interest of Rs.9,52,315 on arrears of sales deposit are to be considered as business income and not income from other sources? (2) Whether, on the facts and in the circumstances of the case, and in law the Tribunal was right in holding that interest of Rs.1,09,753 on…

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