1. The respondent-assessee is engaged in the business of operating cellular mobile telephone services. In terms of a licence awarded in its favour for operation of the said services in the States of Uttar Pradesh, Bihar, Orissa and West Bengal, the assessee was required to provide finance and performance bank guarantees to the Department of Telecommunications. The assessee appears to have arranged these bank guarantees from IFCL, NICL and Lord Krishna Bank. These institutions had in connection with the furnishing of the guarantees required deposit of margin money by the assessee. Interest earned/accrued on these margin money deposits became the subject-matter of a dispute in the assessment year 1996–97. The Assessing Officer was of the view that interest on such deposits had to be taxed as income from other sources. Reliance was in support of that view placed by the Assessing Officer on a Supreme Court decision in Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT, [1997] 227 ITR 172.
2. In appeal, the view taken by the Assessing Officer was reversed by the Commissioner of Income-tax (Appeals) who held that the deposit of margin money with the banks was inextricably linked to the requirement of furnishing bank guarantees by the assessee.
3. The deposits could not therefore be deemed to be parking of surplus funds so as to render any income earned on the same exigible to tax as income from other sources. Reliance in support of that view was placed upon two decisions of the Supreme Court in CIT v. Bokaro Steel Ltd., [1999] 236 ITR 315 and CIT v. Karnal Cooperative Sugar Mills Ltd., [2000] 243 ITR 2.
4. A further appeal by the Revenue filed before the Tribunal having failed, the former is in appeal before us under section 260A of the Income-tax Act.
5. We have heard Mr. Jolly, learned counsel for the Revenue, and perused the record. The finding of fact recorded by the Commissioner of Income-tax (Appeals) and affirmed by the Tribunal is to the effect that the deposit of the margin money by the assessee with the banks was inextricably linked to the furnishing of the bank guarantees by the assessee to the Department of Telecommunications for obtaining a licence. That finding in our view concludes the controversy inasmuch as, if the deposits were indeed inextricably linked to the business of the assessee, the question whether the income accruing on the said deposits would constitute business income stands answered by the decisions of the Supreme Court in Bokaro Steel Ltd., [1999] 236 ITR 315 and Karnal Co-operative Sugar Mills' Ltd., [2000] 243 ITR 2. Both these decisions are in our view sufficient authority for the proposition that where the income in the nature of interest flows from deposits made by the assessee which deposits are in turn inextricably linked to the business of the assessee, the income derived on such deposits cannot be treated as income from other sources.
6. In the light of what is said above no question of law, much less a substantial question of law arises for our consideration in this appeal, which fails and is hereby dismissed.