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TMI Blog2020 (7) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... money etc. As noted that the assessee only made these contentions, but failed to produce any material to substantiate his contention that the interest accrued from FDR should be treated as income from business. As noted that there is shortfall of (₹ 93,46,927 ₹ 91,65,482)= ₹ 2,31,445/- because even if the contention of assessee is correct, then he should have shown the contract/business income at ₹ 88,00,954 + ₹ 5,45,973= ₹ 93,46,127.80, thus there is a clear shortfall of ₹ 2,31,445/-. Set aside the impugned order of the ld. CIT(A) and remand the matter back to the AO with a direction to examine the matter afresh regarding the characterization/nature of receipt in the light of the above ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch on Tax credit and (iii) mismatch on contract receipts/fees. After issuing notice u/s. 142(1) of the Income-tax Act, 1961 ( hereinafter referred to the Act in short), the AO after perusal of 26AS data noted that the assessee has received total amount of ₹ 93,46,927 ( ₹ 88,00,954/- as contract receipt u/s. 194C and ₹ 5,45,973/- as interest u/s. 194A). However, the AO observed that the assessee has shown his contract receipt at ₹ 91,65,482/- . Shortfall of (₹ 93,46,927 ₹ 91,65,482)= ₹ 2,31,445/-. The AO observed that the assessee has disclosed his interest income of ₹ 860/- only and also claimed a deduction u/s. 80TTA of the Act. The AO taking note of the aforesaid facts was of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /or as tender money i.e E/money, Security deposit and so on to different contractees, who insist on it, without which, the assessee would not got the contract. Thus, it was contended by the assessee that interest earned on these FDRs are correctly shown by him by including and treating it as his business income. However, this contention of the assessee was not accepted by the AO. According to AO, the assessee has failed to reconcile how the interest income of ₹ 5,45,973/- received from FDR for which tax was deducted by the bank u/s. 194A of the Act is reflected in contract gross receipt of ₹ 91,65,482/- which includes ₹ 88,00,954/- as contract receipt for which tax was deducted u/s. 194C of the Act. The AO noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected this amount of interest income in his ITR. According to AO, this receipt comes under the fold of income from Other Sources . However, according to assessee, since the FDRs are solely made for the purpose of doing his business and since the FDRs are offered as collateral securities to above bank and/or as tender money i.e. E/money, Security Deposit and so on to different contractees, this interest earned should partake the colour of the business income and not from Other Sources . According to ld. AR from the facts explained by the assessee it can be seen that interest earned from FDR s are in-extricably linked with business/contract and since have direct nexus with the business of contract, therefore, should be chara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,445/-. Therefore, in the light of aforesaid discussion, I set aside the impugned order of the ld. CIT(A) and remand the matter back to the AO with a direction to examine the matter afresh regarding the characterization/nature of receipt in the light of the above mentioned case laws as well as the facts which the assessee bring to the notice of the AO. And if the assessee brings the notice of AO the terms of contract etc and is able to show that the FDR s in question was essential/necessary for obtaining the contract, then the interest income from these FDRs to be treated as business income and if the assessee fails to do so, then AO is at liberty to treat it as income from Other Sources and assessment may be framed in accordance to law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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