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TMI Blog2022 (10) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds: "1. NATURAL JUSTICE The Leaned Commissioner of Income-tax (Appeals)-29, Mumbai "Ld. CIT(A)"] erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order 1.2 It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and illegal, as: (i) The same is framed in breach of the principles of natural justice, and (ii) The same is passed without application of mind to the facts and the submissions brought on record by the Appellant. WITHOUT PREJUDICE TO THE ABOVE 2.1 The Ld. CIT (A) erred in confirming the action of the A.O. in computing bank FD interest income of Rs. 13,06,581/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing in pharmaceutical raw materials, find chemicals and laboratory chemicals. For the year under consideration, the assessee filed its return of income on 20/09/2013, declaring total income of Rs.21,94,500. During the course of assessment proceedings, it was observed that the assessee has credited in Profit & Loss Account Bank F.D. interest income of Rs.13,06,581. It was also observed that for calculation of book profit and remuneration to partners, the assessee has considered Bank F.D. interest as "Business Income". Accordingly, the assessee was asked to show cause as to why the Bank F.D. interest of Rs.13,06,581, be not treated as "Income From Other Sources" and also why the book profit and remuneration to partners should not be calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative ("learned D.R.") vehemently relied upon the order passed by the lower authorities. 8. We have considered the rival submissions and perused the material available on record. From the perusal of the Profit & Loss Account of the assessee forming part of the paper book, we find that the assessee has earned interest on Bank F.D. amounting to Rs.13,06,581. The assessee has also paid Bank interest as well as interest to partners. It is the plea of the assessee that F.Ds were kept for business purpose and also to maintain the liquidity of the business. It is also submitted that the Banks have granted overdraft facility against the F.Ds of the assessee. In this regard, reference was made to a letter dated 23/02/2016, from Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business and also to raise funds for running the said business, hence, the said interest income is linked to the business activities of the assessee. Therefore, we are of the considered view that interest earned on Bank F.D. is in the nature of income from business. As a result, grounds no.2.1 and 2.2, raised in assessee's appeal are allowed. 10. The issue arising in grounds no.3.1 and 3.2, raised in assessee's appeal, is pertaining to disallowance of Rs.7,83,950, out of remuneration paid to the partners. 11. As noted above, the Assessing Officer treated the interest earned on Bank F.D. as "Income From Other Sources" and accordingly, excluded the same for the purpose of working of book profit of the firm. As a result, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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