9911796707
TMI Blog2018 (5) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... a running account with the company. There is no finding or evidence on record or otherwise to show that the transactions are undertaken with the object of evasion of any tax. Hence, find that the ratio of law as laid down in Suraj Devi Dada (2014 (5) TMI 625 - PUNJAB & HARYANA HIGH COURT) squarely applies to the facts of this case also. D.R. also did not controvert the contention of the Ld. A.R. that under the peculiar facts of this case, only the transactions of A.Y.2010-11 should be considered independently ignoring the opening balance for the limited purposes of examining the applicability of sec.2 (22) (e). Thus addition deleted - Decided on favour of assessee Correct head of income - hire charges receipts - busniss income or income from other sources - Held that:- The head of income being income from other sources is a residuary head of income wherein, apart from the specific nature of income as are to be covered under the head income from other sources, only such other incomes are to be included which cannot be assessed under any other head of income. ₹ 2,50,000/- have been received as hire charges of some farm land for one day to a private party for some event. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without prejudice, in any case, this disallowance should not exceed by ₹ 12,55,000/-. 5.1 That under the facts and circumstances, addition of ₹ 2,50,000/- u/s. 68 as alleged income from un-disclosed sources is un-sustainable in law as well as on merits. 5.2 That without prejudice, in any case, the addition of ₹ 2,50,000/- should have been made as income from business against wrongly made as income from other sources. 5.3 That without prejudice, in view of G.N. 5.2., the addition of ₹ 2,50,000/- should have been set off against available b/f. losses. 6.1 That without prejudice, under the facts and circumstances, the AO erred in law as well as on merits in not setting offf the income from other sources of ₹ 49,70,000/- out of available b/f. losses (4720000 as addition u/s. 2 (22) (e) + 250000 as addition u/s. 68). 6.2 That without prejudice, in any case, income from other sources has to be set off out of b/f. losses to the extent of b/f. unabsorbed depreciation included in b/f. losses. 7. That under the facts and circumstances, no interest u/s. 234 B can be charged on deemed income of ₹ 47,20,000/-assessed u/s. 2 (22) (e) and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. CIT (A) confirmed the disallowance by holding that no income can be earned without incurring some expenditure. Considering the huge investment in shares, he confirmed the disallowance of ₹ 39,559/-calculated as per Rule-8D. 7. The Ld. A.R. has not disputed that disallowance u/s.14A/Rule-8D can be made, however his limited grievances for the amount of disallowance. It has been argued that the disallowance, under no case, can exceed the exempted income which is only ₹ 13,063/-, therefore his limited contention is that the disallowance u/s.14A/Rule-8D should be restricted only up to ₹ 13,063/-, which is the amount of exempted income. The Ld. A.R. has placed reliance on Joint Investment (P.) Ltd. v. CIT [2015] 372 ITR 694/233 Taxman 117/59 taxmann.com 295 (Delhi) wherein it has been held that the disallowance u/s.14A cannot exceed the exempted income. The Ld. D.R., on the other side, placed reliance on the findings of A.O. and as the same has been confirmed by CIT (A). 8. I have carefully considered the issue. It is not in dispute that exempted income is only ₹ 13,063/-. Thus in view of the above cited case law, the disallowance u/s.14A/Rule-8D canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished in the paper book at Pg. No.6. It has been submitted that during this year, in the beginning, the assessee had given certain amounts to the said company and thereafter the company returned back out of the said amounts to the assessee. These amounts returned back by the company out of the amounts received earlier in this year, is to be taken as the refund of money to assessee taken by the company earlier in the same year. It has been stated that such returns of amounts by the said company to the assessee should not be linked with opening payable and thus, since it should be treated as the amount returned back by the company, taken by the company earlier, cannot be covered u/s. 2 (22) (e). In this manner, as per paper book Pg.6, it has been argued that the maximum outstanding payable by the assessee to the said company at any point of time during the year calculates only ₹ 12,55,000/-. It has been argued that only ₹ 12,55,000/- should be examined to the test of applicability of sec. 2 (22) (e). Regarding ₹ 12,55,000/-, the Ld. A.R. further submitted that the assessee has been maintaining a running a/c with the company as a director/share holder of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the year, firstly, the assessee has given amounts to the said company, thereafter the company has returned back to the assessee and so on and so forth. To the extent, the amounts taken earlier by the company and thereafter returned to the assessee, the said returned amount cannot be considered as the loan or advance received by the assessee during the year. On complete analysis of the transactions only of A.Y.2010-11, the maximum amount outstanding at any point of time in the hands of the assessee as payable to the company calculates ₹ 12,55,000/-. Thus, out of ₹ 47,20,000/-, in total, given by the said company to the assessee in this year, only ₹ 12,55,000/- can be examined w.r.t. applicability of sec. 2 (22) (e) of the I.T. Act. Thus to the extent of ₹ 34,65,000/-, out of ₹ 47,20,000/-, is not covered u/s. 2 (22) (e). Now, regarding balance ₹ 12,55,000/-, the claim of the assessee is that he has maintaining the running account with the company being a share holder and there is no finding or evidence that there is any intend to evade the tax, which was the objective of introducing sec. 2 (22) (e). I have examined this contention in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of not pressing this ground, for whatever reason may be, this addition stands sustained. The Ld. A.R., however submitted that his grievance is limited to the extent that the A.O. has made addition under the head as income from other sources while, correctly the head of income should be as income from business and profession. The Ld. A.R. argued that since this income has been assessed as from a business/earning activity therefore it should be correctly assessed as income from business and profession and not as income from other sources, which can be there only as a residuary head of income when there is no other head of income to which the said income can be allocated. 13. I have carefully considered this issue. I have already confirmed the addition of ₹ 2,50,000/- for the reasons given in Para-5 above. However, I find myself in agreement with the contention of the Ld. A.R. that the correct head of income for this addition should be as income from business and profession. The head of income being income from other sources is a residuary head of income wherein, apart from the specific nature of income as are to be covered under the head income from other sources, only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orbed B/F depreciation which is sufficiently available to adjust and absorbed this whole addition. The Ld. A.R., contended that sec.32 (2) provides that un-absorbed depreciation of earlier years becomes the current year depreciation and consequently it takes the nature and character of current year business income. It has been further submitted that sec.71 (1) r/w sec.71 (2) further provides that the current year business loss can be set off against any income accept salary income. In view of this it has been argued that since the un-absorbed B/F depreciation becomes the business loss of the current year therefore the income from other sources can be definitely set off out of this B/F depreciation which becomes the business loss. The Ld. A.R. further argued that CIT (A) has misinterpreted sec.72 (2) for not allowing the benefit of set off the income from other sources out of B/F depreciation since sec.72 (2) only provides that any allowance (which also includes depreciation) shall be first treated as provided in sec.71 (1) and only thereafter the balance will be carry forward. Thus it has been argued that sec.72 (2) only provides that to the extent allowance remains un-set off as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst income from other sources of the current year. Same is the ratio of case law as cited above by the Ld. A.R. Sec.72 (2) as mentioned by the Ld. CIT is for a different preposition. Sec.72 (2) provides that any allowance shall be first treated as provided in sec.71 (1) and only thereafter the balance shall be carry forward. Thus, sec.72 (2) nowhere restricts for setting offf of income from other sources from B/F depreciation. It is also found that in the case of the assessee, in A.Y.2009-10, the A.O. himself allowed similar set off u/s.143 (3). It is also noteworthy that for not allowing this set off, in this year, the A.O. has not assigned any reason whatsoever. Thus in view of above legal position and following the ratio of above cited case including the past history of the assessee, I direct that whatever income stands assessed under the head income from other sources should be allowed to be set off against B/F depreciation and B/F losses. In result this ground of appeal is allowed. 16. Ground No.7 is against interest u/s.234B. The main contention of the Ld. A.R. is that interest u/s.234B cannot be levied on deemed income u/s.2 (22)(e) in view of sec.209 (1) (a) r/w sec.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
