Calcutta High Court
Eveready Industries (India) Ltd vs Jt. Commissioner I.Tax Spl. Range -12 on 4 March, 2010
Author: Kalyan Jyoti Sengupta
Bench: Kalyan Jyoti Sengupta
ITA No. 229 OF 2001
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
EVEREADY INDUSTRIES (INDIA) LTD.
Versus
JT. COMMISSIONER I.TAX SPL. RANGE -12
BEFORE:
The Hon'ble JUSTICE KALYAN JYOTI SENGUPTA
The Hon'ble JUSTICE KALIDAS MUKHERJEE
Date : 4th March, 2010.
The Court :-Having heard Dr. Pal, Learned Senior Counsel
for the appellant and Mr. Bhowmick for the respondents and having gone
through the impugned judgment and order we are of the view that in this
matter the following substantial questions of law are involved for rendering
decision by this Court ;-
i) Whether the interest income by way of investment of
the surplus funds generated and arising from the
carrying on the business of growing and
manufacturing tea should be treated as incidental to
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the tea business and/or as part of the income derived
from the tea business for the purpose of Rule 8 of the
Income-tax Rules, 1962 ?
ii) Whether, on the facts and in the circumstances of the
case, the investment of surplus funds generated and
arising out of the carrying on of the tea business,
constitute the same business and the income arising
from the investment of the surplus funds should be
treated as income from the same business, namely,
the tea business for the purpose of Rule 8 of the
Income-tax Rules, 1962 ?
It appears that the identical point was raised in another
matter in respect of the same assessment year and this Bench has decided
the matter in favour of the assessee i.e. in the matter of ITA No. 123 of
2000 (Eveready Industries India Limited vs.Commissioner of Income Tax &
Anr.. In that matter the Division Bench of this Court held that the Income
Tax Appellate Tribunal and Commissioner of Income Tax substantially
erred in law in treating the interest income earned by the assessee by
investing surplus fund of the business in short-term deposits as business
income and rightly applied the tests as provided in sub-rule (1) of Rule 8 of
the said Rules while making the assessments in relation to the income of
the assessee.
It was also held that the Income Tax Appellate Tribunal and
Commissioner of Income Tax substantially erred in law in directing the
assessing officer to revise the assessments of the aforementioned
assessment years by treating the income earned by the assessee from such
short-term investments as 100% (hundred) per centum assessable
treating the same as income from the other sources.
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In view of the aforesaid decision we have no option but to
decide this appeal answering the questions formulated here as below ;-
Question no. ( i ) is answered in the affirmative.
Question no. (ii) is answered in the affirmative.
Accordingly, the judgment and order is set aside.
There will be no order as to costs.
All parties are to act on a xerox signed copy of this order on the
usual undertakings.
(KALYAN JYOTI SENGUPTA, J.)
(KALIDAS MUKHERJEE, J.)
.
GH