9911796707
|
Home
Issues:
1. Classification of interest income under section 214 as business income or income from other sources. Analysis: The judgment deals with the issue of whether interest income of Rs. 56,972 received by the assessee under section 214 of the Income-tax Act, 1961 should be classified as business income or income from other sources. The Income Tax Officer (ITO) treated the amount as income from other sources, while the Commissioner (Appeals) directed it to be treated as business income. The department appealed, arguing that the amount should be classified as income from other sources. The Tribunal considered the arguments presented by both sides. The department relied on the decision of the Madras High Court in Smt. B. Seshamma v. CIT, which held that interest received under section 214 is taxable under the head 'Income from other sources.' On the other hand, the assessee and the Commissioner (Appeals) relied on the decisions of the Punjab and Haryana High Court and the Supreme Court, which supported the classification of such interest income as business income. The Tribunal analyzed the legal principles involved and held that the interest received under section 214 does not arise from business activities but from the deprivation of the use of money, thus falling under 'Income from other sources' and not business income. The Tribunal emphasized that the nature of payment of advance tax and the subsequent refund further supported this classification. The Tribunal distinguished the cases cited by the assessee, highlighting the differences in tax levies and deductions under different Acts, ultimately concluding that the interest received should be classified as 'Income from other sources.' Therefore, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and restoring that of the ITO, holding that the interest income of Rs. 56,972 should be chargeable under the head 'Income from other sources' and not 'Profits and gains of business or profession.'
|
