2001 (9) TMI 233 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of deduction u/s 54F.
2. Classification of commission income as "business income" or "income from other sources."
3. Due date for filing the return and its impact on the exemption u/s 54F.
4. Non-disposal of ground regarding the deposit date with Punjab National Bank.
5. Technical breach in delayed payment in the capital gain account.
6. Re-assessment u/s 147.

Summary:

1. Disallowance of Deduction u/s 54F:
The assessee's claim for exemption of Rs. 60 lakhs u/s 54F was disallowed by the Assessing Officer on the grounds that the assessee did not have regular business income and thus the due date for filing the return was 30-6-1995. The deposit to avail exemption was made on 1-9-1995, which was beyond the prescribed date.

2. Classification of Commission Income:
The CIT(A) and the Assessing Officer classified the commission income as "income from other sources" instead of "business income." The assessee contended that the commission earned from M/s. Sawalka & Co. was business income, citing past business activities and relationships. The Tribunal found that the commission income should be classified as "business income," referencing various judicial precedents supporting the broad interpretation of business activities.

3. Due Date for Filing the Return:
The Tribunal considered whether the due date for filing the return was 30-6-1995 or 31-8-1995. It concluded that if the commission income is considered business income, the due date would be 31-8-1995. Since the commission was classified as business income, the return filed on 31-8-1995 was within the due date.

4. Non-disposal of Ground Regarding Deposit Date:
The CIT(A) did not address the ground raised by the assessee regarding the deposit date with Punjab National Bank. The Tribunal noted that the bank was on strike on 31-8-1995, and the deposit was made on 1-9-1995 due to circumstances beyond the assessee's control.

5. Technical Breach in Delayed Payment:
The Tribunal held that the delay in deposit due to the bank strike should not disqualify the assessee from claiming the exemption u/s 54F. The Tribunal emphasized that the provision should be interpreted liberally to encourage investment in house properties.

6. Re-assessment u/s 147:
The additional ground regarding re-assessment u/s 147 was not pressed by the assessee and was dismissed.

Conclusion:
The Tribunal allowed the appeal partly, directing the Assessing Officer to classify the commission income as "business income" and to grant the exemption u/s 54F, considering the deposit made on 1-9-1995 as compliant due to the bank strike. The appeal was thus partly allowed.