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Commnr. Of Income Tax, Ahmedabad vs Sarabhai Holdings Pvt. Ltd on 21 October, 2008

26. The judgment of the Division Bench in Lok Housings [2009] 308 ITR 356 (Bom) is based on the peculiar facts and circumstances as they emerged before the court in that case. The decision would indicate that the investments made by the assessee were not a mere investment of its surplus funds. The investments made were regarded by the Division Bench as those which resulted in earning income from the running business of the assessee. The interest was utilized for the purpose of business and it was in these circumstances that the Division Bench must be construed to have found the existence of a direct and proximate nexus between the income that was earned and the business activity of the assessee. So construed, the judgment of the Division Bench is confined to the facts as they emerged before the court in that case. The judgment of the Division Bench in Lok Holdings [2009] 308 ITR 356 (Bom) cannot be held to lay down a broad proposition of law that an investment of surplus funds by an assessee who carries on business must necessarily be construed to result in the generation of business income by way of interest received on investment."
Supreme Court of India Cites 10 - Cited by 74 - V S Sirpurkar - Full Document

Commissioner Of Income-Tax, Poona vs Hindustan Antibiotics Ltd. on 26 March, 1973

14. Mr. Pardiwalla's reliance upon the judgment of this Court in CIT v. Hindustan Antibiotics Ltd. (1982) 137 ITR 42 is not well founded. It is important to note that the Court found that the assessee had accumulated large funds to finance the entire cost of a plant which, in fact, was commissioned in the subsequent years. The same was a SRP 10/24 ::: Downloaded on - 09/06/2013 19:08:36 ::: ITR63.96 normal feature of the assessee's business. The accumulated amounts were kept in fixed deposits in order to earn interest to raise the profit of the assessee until the funds accumulated could be used for the assessee's business as contemplated. The authorities accepted these findings but despite the same, upheld the deduction made by the ITO.
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