R.K.Agrawal, J. - (1.) The Tribunal, Allahabad, has referred the following two questions of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as "Act"), for opinion of this Court : 1. Whether, on the facts and in the circumstances of the case, the Hon'ble Member of Tribunal was justified in law in holding that the order of the AO taxing the amount of interest and miscellaneous receipts, was erroneous and against law ?
(2.) Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally correct in holding that the amount of interest and miscellaneous receipts were not exigible to tax at the hands of the assessee-company as income from other sources ? 2. The present reference relates to the asst. yr. 1988-89.
(3.) Briefly stated, the facts giving rise to the present reference are as follows : The company was incorporated in 1983 with the main object of setting up a fertiliser plant and manufacturing of fertilisers. During the year under consideration, the factory was under construction and no manufacturing activity had been undertaken. The assessee-company received certain loans from financial institutions with the stipulation that any interest earned on such amount of loan not utilised temporarily would go to reduce the liability of the loan. Due to certain unexpected delay, the amount of loan received remained lying with the bankers and the company managed to get some interest on these deposits with the bank. Besides, there were certain miscellaneous receipts. The AO taxed the interest and miscellaneous receipts. In appeal, the learned CIT(A) had set aside the order of the AO. In second appeal, the Tribunal following its earlier decision in assessee's own case, for the asst. yrs. 1986-87 and 1987-88, held that the alleged receipt of amount of interest plus miscellaneous receipts were not exigible to tax, as income from other sources, but were only receipts which had to be taken into consideration in reducing the cost. The Department, being aggrieved, has come up in reference.;