9911796707
TMI Blog2017 (3) TMI 1873X X X X Extracts X X X X X X X X Extracts X X X X ..... her the CIT-A justified in treating the interest accrued on Fixed Deposits as income from business in the facts and circumstances of the case. 3. During the course of scrutiny of return, the AO found that the assessee claimed interest on fixed deposit made out of accumulated profits and reserves is income derived from industrial undertaking as deduction. The AO also found that the assessee suffered a loss from housing project and income from other sources. In explanation, the assessee filed revised computation claiming that the interest income as its business income. According to AO, the filing of revised computation is an afterthought. Since the assessee did not claim the deduction u/s. 80IB(10) of the Act in its original return, thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per revenue account is shown under different heads like income from house property, income from other source and business income and it is only shown for complying with the statutory requirements which govern the housing board. The financial statements are prepared after complying with the legal requirements but from the operational point of view all the income, disclosed under whatever head are the integral parts of its only business i.e housing project and for the purpose of the Income tax Act the income of the assessee is to be considered as and only the profits derived from the housing projects. The assessee claimed that the computation of income as filed by the assessee exhibits positive income and such income is from the housing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the company was established for carrying on business. 9.4 In the case of CIT vs. Tamil Nadu Dairy Development Corporation Ltd [1995] 216 ITR 535 (Mad.), the Madras High Court has held, following the decision of the Supreme Court in the case of CIT vs. Calcutta National Bank Ltd. [1959J 37 ITR 171 (SC) that "business" is a word of very wide connotation with the result that it should ordinarily be treated as business income. Except where the investments are independent of business made out of surplus funds in long term deposits, there is no possibility of assessing the same as otherwise - Tirupati Woolen Mills Ltd. 193 ITR 252 (Cal.), CIT vs. AP Industrial Corporation 175 ITR 361 (AP); CIT vs. East India Hotels Ltd. 207 ITR 881 (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on the decision of the Hon'ble Calcutta High Court in the case of Tirupati Woolen Mills Ltd 193 ITR 252(Cal). 9. Heard rival submissions and perused the material available on record. We find that the assessee did not claim the deduction u/s. 80IB of the Act in its original return. But, however, in explanation offered before the AO, the assessee claimed deduction u/s. 80IB(10) of the Act towards the accrued interest on fixed deposits filed in the revised computation of income showing the said interest income as its business income. Admittedly, the assessee shown the said income as income from other sources in the original return. We find that the AO has allowed deduction under similar circumstances u/s. 143(3) for the AY 2006-07 based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure is on account of interest on loans which have been utilised for setting up the new factory which had not started during the year. The claim of the appellant is, therefore, disallowed." Aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee went up in appeal before the Tribunal. The Tribunal observed that the business activities may consist of purchase and sale resulting in profit or loss. The absence of such activities during the year may not necessarily mean that the business activities have come to a standstill. The erection of the plant at Sonepat in Haryana is nothing but a business activity and the assessee is busy in the said activity during the year under consideration. The Tribunal further foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged by the Revenue. That apart, the fact remains that although the income was earned by way of interest from the fixed deposits, the Income-tax Officer allowed the expenditure incurred by the assessee to the extent of the interest income which would go to show that the Income-tax Officer must consider the expenditure in connection with carrying on business, otherwise, he would be allowed only the expenditure which was incurred in connection with earning of the interest income. Thirdly, the Tribunal found as fact that earning of interest income arose from the utilisation of commercial assets. The Tribunal found that funds utilised in making fixed deposits with the bank where the business funds lying temporarily in surplus with the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
