1999 (3) TMI 450 - AT - Income Tax

Summary

Issues:
1. Assessment of interest income on term deposits and fixed deposits as business income.
2. Reduction of lump sum addition from Rs. 30,000 to Rs. 15,000.
3. Deletion of addition of Rs. 10,100 made on account of accrued interest.

Analysis:

1. The first issue pertains to the assessment of interest income on term deposits and fixed deposits as business income. The revenue objected to the order of the CIT(A) directing the Assessing Officer to assess the interest income as business income. The Tribunal referred to a similar issue in the assessee's preceding year's case where the Tribunal had decided in favor of the assessee. Following the precedent, the Tribunal confirmed the order of the CIT(A) for the current year as well, dismissing the appeal by the revenue.

2. Moving on to the second issue, the revenue contested the reduction of a lump sum addition from Rs. 30,000 to Rs. 15,000 by the CIT(A). The Assessing Officer had raised concerns about the low net profit percentage and lack of work-wise accounts maintained by the assessee. Despite the absence of specific defects in the books of account, the Assessing Officer made a lump sum addition under section 145(1). The CIT(A) reduced the addition to Rs. 15,000, acknowledging that the assessee's work for the government and payments via cheques supported the lower addition. The Tribunal found the CIT(A)'s view acceptable, dismissing the revenue's appeal on this ground.

3. Lastly, the third issue revolved around the deletion of an addition of Rs. 10,100 made on account of accrued interest. The Assessing Officer estimated additional interest based on partial interest provision on fixed deposits, despite the assessee following a mixed system of accounting. The CIT(A) relied on a legal precedent and held that the assessee could consider the bank-certified interest amount for tax purposes. Consequently, the CIT(A) deleted the addition, which the Tribunal upheld, dismissing the revenue's appeal on this ground as well.

In conclusion, the Tribunal upheld the orders of the CIT(A) on all three issues, dismissing the revenue's appeal in its entirety.