- (1.) WE have heard Sri A.N. Mahajan for the appellant Department and Sri R.R. Agrawal for the respondent. So far as the first two questions sought to be raised in this appeal are concerned, although the total cost of all the machinery parts was Rs. 2,35,710 in the relevant year, but each part individually costs less than Rs. 5,000 and, therefore, allowing of 100 per cent depreciation on each individual part instead of the depreciation of only 25 per cent was justified. The Tribunal has not committed any error on the said question.
(2.) THE next question sought to be raised before us with regard to Tribunal deleting the addition of Rs. 5,725 on account of brokerage expenditure relating to earlier year, the issue stands concluded in favour of the assessee and against the Department by a decision of this Court in the case of Swadeshi Cotton Mill Co. Ltd. vs. CIT (1980) 15 CTR (All) 334 : (1980) 125 ITR 33 (All).
(3.) THE fourth question of law which has been sought to be raised in this appeal by the Department relates to the Tribunal's decision treating the interest income out of 'bridge loan' under the head 'Business income' instead of the head 'Income from other sources'. The facts recorded in the Tribunal's order indicate that the assessee had taken a loan of Rs. 2 crores from the State Bank of Rajasthan (sic) to finance its expansion plan. As the loan released by the bank could not be utilised immediately, therefore, the assessee as a prudent businessman temporarily invested the borrowed funds on which interest amounting to Rs. 3,44,843 was earned by the assessee as against the interest of Rs. 4,82,243 paid by the assessee on the borrowed money. Such temporary use of the borrowed funds by investing and earning interest according to the Tribunal was not an investment of a nature which would bring the interest income under the head 'Income from other sources'. The Tribunal has relied upon a decision of the Supreme Court in the case of Keshavji vs. CIT (1990) 82 CTR (SC) 123 : (1990) 183 ITR 1 (SC) and the case of India Cement vs. CIT (1966) 60 ITR 52 (SC). The Tribunal has also relied upon a decision of the Madras High Court in the case of CIT vs. Tamil Nadu Dairy Development Corporation Ltd. (1995) 216 ITR 535 (Mad). In the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC), it has been held that interest earned on surplus funds kept in short term deposits is chargeable under s. 56 of the Act. The apex Court has held as follows : "The basic proposition that has to be borne in mind in this case is that it is possible for a company to have six different sources of income, each one of which will be chargeable to income -tax. Profits and gains of business or profession is only one of heads under which the company's income is liable to be assessed to tax. If a company has not commenced business there cannot be any question of assessment of its profits and gains of business. That does not mean that until and unless the company commences its business, its income from any other source will not be taxed. If the company, even before it commences business, invests the surplus funds in its hands for purchase of land or house property and later sells it at profit, the gain made by the company will be assessable under the head 'Capital gains'. Similarly, if a company purchases a rented house and gets rent, such rent will be assessable to tax under s. 22 as income from house property. Likewise, a company may have income from other sources. It may buy shares and get dividends. Such dividends will be taxable under s. 56 of the Act. The company has also, as in this case, keep the surplus funds in short - term deposits in order to earn interest. Such interest will be chargeable under s. 56 of the Act." ;