- (1.) THESE cases relate to two different assessment for the years 1972-73 and 1973-74. In view of these circumstances the office is directed to register the above reference cases as D. B. IT Reference Application Nos. 12 and 12A of 1977. As both these cases arise out of one order passed by the Tribunal, Jaipur Bench, Jaipur and identical questions of law arise in relation to both the assessment years, the same are disposed of by one single order.
(2.) THE Tribunal, has referred following questions of law for the opinion of this Court : "1. Whether, on the facts and in the circumstances of these cases, the Tribunal was justified in holding that during the years under consideration the company merely invested its surplus funds when they were not required by it for the time being and that it did not carry on any business of money-lending ? Whether, on the facts and in the circumstances of these cases, the Tribunal was justified in holding that the income form interest earned by the assessee-company should be compute in terms of ss. 56 and 57 and not in terms of s. 28 of the IT Act, 1961 ?" We have gone through the order of the Tribunal dt. 31st March, 1976. The Tribunal has placed reliance on Kishan Prasad & Co. Ltd. vs. CIT (1955) 27 ITR 49 (SC) in which it was held : "The circumstance whether a transaction is or is not within the company's powers has no bearing on the nature of the transaction, or on the question whether the profits arising therefrom are capital accretion or revenue income." After considering the entire material on record the Tribunal has arrived at the finding that in the facts of the present case the company was investing its surplus funds and was deriving interest thereon, instead of keeping that idle. Such transactions could not be said to constitute money- lending business. The Tribunal further held that after purchasing the property the assessee- company had approximately Rs. 20,000 surplus with it. It was invested by it instead of keeping it idle. When the money was needed for making alterations in the property, and for making repayment to the creditors, it was withdrawn by the assessee-company and the funds were utilised for the aforesaid purpose. The Tribunal held that such activity would not constitute business. The company merely invested its funds when they were not required by it for the time being. As such, the company form such investment cannot be assessed as business income. The Tribunal has further held that such income would be assessable under s. 56 of the IT Act, 1961. Mr. Sharma, the ld. counsel for the assessee was unable to show any authority taking a contrary view nor he was able to show any error in the order of the ld. Tribunal . In view of these circumstances both the questions referred to above are answered in the affirmative and in favour of the Revenue.;