2002 (4) TMI 568 - AT - Income Tax

Summary

Issues:
Deletion of addition of interest on Fixed Deposits

Analysis:
The Revenue appealed against the deletion of an addition of Rs. 38,619 made by the Assessing Officer in respect of interest on Fixed Deposits. The Assessing Officer observed that the assessee earned interest not disclosed in the return of income. The Revenue argued that there was no discussion on the claim that the Fixed Deposits belonged to the HUF and not the individual assessee. The DCIT(A) deleted the addition based on the submission that the deposits were made from agricultural income of the HUF. The Revenue sought to set aside the DCIT(A)'s order and restore that of the Assessing Officer.

The counsel for the assessee presented details of agricultural holdings and income from agriculture derived by the HUF. The HUF had sufficient funds to invest in Fixed Deposits, and the interest earned was from these funds. The counsel argued that the Assessing Officer failed to establish a link between the FDs and the individual's income. The DCIT(A) also deleted an addition of Rs. 16,000 on interest from loans given out of HUF funds consisting of agricultural income. The counsel supported the DCIT(A)'s decision.

The Tribunal examined the submissions and orders of the authorities. It noted the substantial income derived by the HUF from agriculture, as evidenced by documents submitted. The Assessing Officer acknowledged the agricultural income of the HUF in the capital account. The investments in loans, advances, and FDs were explained to be from agricultural income, which the Assessing Officer did not refute with convincing reasons. The Tribunal found that the deletion of the addition of Rs. 16,000 in a previous year had been accepted by the Department. Considering all relevant facts, the Tribunal agreed with the DCIT(A)'s decision to delete the addition of Rs. 38,619, finding no merit in the Revenue's appeal.

Therefore, the Tribunal dismissed the appeal, upholding the DCIT(A)'s decision to delete the addition of interest on Fixed Deposits.