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TMI Blog2015 (10) TMI 1740X X X X Extracts X X X X X X X X Extracts X X X X ..... HI-D) and in the case of Loka Shikshana Trust vs. CIT (1975 (8) TMI 1 - SUPREME Court), wherein the Hon'ble Apex Court held that the regular course of dealing in money lending could not be brushed aside merely for the reason that the assessee was not having any money lending licence. In that case, the assessee entered into number of transactions over the year and earned interest on loans and advances given in the ordinary course of its activities. The Hon'ble Apex Court held that "absence of money lending licence is not so crucial for the purpose of Income Tax Act, if the nature of activity undertaken by the assessee can be decided on the basis of other facts." Admittedly, the assessee was engaged in granting of loans on regular basis and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was not allowed by the AO? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee was an individual. She had filed her return of income on 10.10.2004 declaring income of ₹ 42,20,191/- i.e. ₹ 1,75,396/- from business of clothes as proprietor of M/s Reeta Industries and ₹ 41,95,010/- from money lending business. The interest income from money lending had been shown at ₹ 48,20,155/- and net profit of ₹ 41,95,010/-. While framing assessment, the Assessing Officer assessed income at ₹ 70,32,250/- by treating the interest income of ₹ 47,05,978/- as income from other sources instead of business income as claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The activity carried on by the assessee can be termed as internal management of funds which is not the money lending business but spread over to the family members or other connected persons. 5. The CIT(A) while allowing the appeal filed by the assessee held that the assessee had been carrying on business of money lending for the last many years and there was continuous rotation of money wherein deposits were made with different parties. It was also recorded that for the immediately preceding assessment year 2003-04, the Assessing Officer vide order dated 9.1.2006 under Section 143(3) of the Act had accepted similar claim of the assessee. Thus, the claim of the appellant for the current assessment year 2004-05 was also accepted. The rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in the facts and circumstances of that case, in the absence of licence for money lending business, interest earned by the assessee was held to be from business and profession. The principle laid down in this decision of the Hon'ble ITAT also goes in favour of the appellant's ground. Further, the AO has observed that the appellant had not debited any expenses on account of business of money lending. However, as pointed out in the written submissions of the appellant, the appellant rather fruitfully deployed its funds with the parties of repute whom she was confident for the security of principal as well as interest. I agree with the contention of the learned counsel that it is not essential that to run such business the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana vs. DCIT (79 ITD 115) (Mum) and in the case of Loka Shikshana Trust vs. CIT (101 ITR 234) (SC), wherein the Hon'ble Apex Court held that the regular course of dealing in money lending could not be brushed aside merely for the reason that the assessee was not having any money lending licence. In that case, the assessee entered into number of transactions over the year and earned interest on loans and advances given in the ordinary course of its activities. The Hon'ble Apex Court held that absence of money lending licence is not so crucial for the purpose of Income Tax Act, if the nature of activity undertaken by the assessee can be decided on the basis of other facts. Admittedly, the assessee was engaged in granting of loans on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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