2013 (8) TMI 1147 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of loss related to interest income.
2. Classification of income as agricultural income or business income.

Disallowance of Loss Related to Interest Income:
The appeal was against the order of the Commissioner of Income Tax (Appeals) VI, Chennai for the assessment year 2009-10. The assessee, a retired employee, had borrowed funds from a bank and deposited them back, claiming the interest payment made to the bank as loans. The Assessing Officer disallowed the losses claimed by the assessee. The ld. CIT(Appeals) directed the Assessing Officer to delete the loss without detailed examination. Both parties agreed that the issue was not clearly discussed by the authorities, leading to a remittance request. The ITAT set aside the order of the ld. CIT(Appeals) and directed the Assessing Officer to examine the issue in detail and pass a speaking order.

Classification of Income as Agricultural Income or Business Income:
The second issue was whether the income from the sale of Padur land should be treated as agricultural income or business income. The Assessing Officer considered the transaction as business income due to the location and frequent land transactions by the assessee. The assessee contended that the land was agricultural and exempt from taxation, supported by the sale of similar land by the assessee's wife. The ld. CIT(Appeals) directed the Assessing Officer to treat the income as agricultural based on the wife's sale and some Tribunal decisions. However, the ITAT found insufficient examination of the land and surrounding factors, remitting the matter back to the Assessing Officer for a detailed review.

In conclusion, the appeal by the Revenue was allowed for statistical purposes, with the ITAT emphasizing the need for a thorough examination of facts and legal provisions in both issues.