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TMI Blog1989 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... 's representatives agreed "that the assessee would not be entitled to the set off claimed by him'. In this view of the matter the ITO rejected the assessee's claim for the set off in respect of the loss arising in asst. yr. 1983-84 and being carried forward on account of some portion of the loss still remaining unadjusted against the income for asst. yr. 1983-84. 4. Before the AAC it was contended by the assessee's counsel that in asst. yr. 1983-84 ITO had treated the interest income pertaining of certain Fixed Deposit Receipts as the income of the assessee. It was also stated that these Fixed Deposits were taken in the name of the assessee and his family members out of the funds of the sole proprietory concern, namely, Kailash Metal Cast with a view to offer a bank guarantee in respect of the customs duty on the import of brass scrap. In this way it was sought to be argued that there was an "element of business" in the entire transaction of taking out Fixed Deposit Receipts, utilising them to furnish a bank guarantee and earning interest on these deposits. It was also pointed out that the ITO on these set of facts had considered the Fixed Deposits as "business assets" of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income received from the FD alongwith the business income of the appellant for the asst. yr. 1983-84 and a part of the loss shown in the business of scrap was given set off against the same. Moreover, the F.Ds. are taken in order to offer guarantee against the disputed customs duty. It is only for the business purpose of the appellant and thus the interest received therefrom assumes the nature of business income of the appellant. Now coming to the question that the counsel had agreed for such disallowance during the course of hearing before the ITO for the years under appeal, on being asked, it has been submitted by the counsel that since from the view taken by the ITO while treating the issue at the time of hearing, the counsel could not read out his mind regarding the action going to be taken on the very issue and there was not other alternative other than to give his consent. This being so, there is no room for the revenue to hold that such consent surrenders the right to challenge the same in appeal. Thus from the facts and circumstances of the case, the ITO was not justified in not allowing the set off of loss computed and carried forward from the asst. yr. 1983-84 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the "concession" given by the assessee's counsel during the course of the assessment proceedings. According to him, it appeared to be a case where the ITO has indicated his intention to reject the claim in respect of carried forward loss and the assessee's counsel having no option but to cease making any further submissions in support of the claim. This, according to him, did not mean that the claim had been given up and even if it was presumed to be so then there could be no estoppel against law. 8. The learned counsel thereafter also invited our attention to the ground of appeal taken up by the Revenue for the submission that there was no challenge to the action of the AAC in treating the income from interest on Fixed Deposits as the "business income". In support of his detailed arguments the learned counsel for the assessee strongly relied on the decision of the Hon'ble Gujarat High Court in the case of Bansidhar (P) Ltd. vs. CIT (1981) 20 CTR (Guj) 90 : (1981) 127 ITR 65 (Guj). 9. In reply, the learned Departmental Representative sought to distinguish the decision of the Gujarat High Court supra on the ground that the same did not pertain to the provisions of s. 72(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the ITO included. It would be worthwhile reproducing the relevant observations of the ITO in this connection as extracted from the assessment order pertaining to asst. yr. 1983-84 as under: "2. Assessee is proprietor of Kailash Metal Cast dealing in brass parts. During the years the assessee had imported certain brass scraps. In respect of a part of the customs duty on these imports which was disputed, the assessee had to furnish bank guarantee. The assessee furnished FDRs standing in the names of the following persons as guarantee against the disputed duty: Rs. Kajodimal Ramnarayan 95,000 Vasantben Chatarlal 95,000 Gulabben Prahlad 95,000 Indirabeen Kajodimal 95,000 Chhatralal Ramnarayan 95,000 Prahlad Shrikrishan 95,000 . 5,70,000 The following circumstances were noticed in respect of the above FDRs: (1) FDR of Rs. 95,000 is in the name of the assessee himself whereas the five other persons in whose name the other Fds stand are all c lose relatives of the assessee. (2) The whole of the first 3 FDRs has been taken from funds of Kailash Metal Cast of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 28,026 in the accounts of these two firms. Therefore, the FDs taken out in the names of 5 persons in S.Y. 2038 cannot be against any loan advanced by the two firms to the assessee in S.Y. 2038. The amount of Rs. 71,974 mentioned in the representative's letter is the total credit balance in the accounts of the two firm as at the end of S.Y. 2039. The total deposits taken out in the names of 5 persons in Rs. 3,10,000. Therefore, the argument that the deposits were taken in the names of those persons against Rs. 71,974 advanced by the firms is not convincing at all. The amount allegedly advanced is not even 25 per cent of the total deposits. Even if it is accepted that the loan advanced by the firms was on behalf of its partners it is seen that apart from the deposits taken in their names, the assessee had also advanced interest-free loans to some of them as under: Rs. Shri Chhatralal Ramnarayan 1,25,000 Shri Prahlad Shrikishan 80,000 It is also seen that interest free loan advanced by the assessee to the sister concerns is much more than the interest free from loan of Rs. 71,974 received by the assessee from sister concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur aforesaid observations to disturb the finding already recorded by the ITO that these Fixed Deposits are the "business assets" of the assessee since there is no challenge on these score by Revenue authorities. 14. Even proceeding further on the basis that these Fixed Deposits are "business assets" of the assessee, we are of the view that these do not become a part and parcel of the assessee's discontinued business of dealing in brass scrap merely on the ground that these Fixed Deposits have been offered as a guarantee in respect of a business transaction in asst. yr. 1983-84. The decision relied upon by the assessee's counsel does not come to his aid since that was an issue pertaining to the allowability of expenditure and that also in respect of a Private Limited Company which carried on different activities. The proposition laid down by their Lordships could be held applicable to a Private Limited Company where the system of working is different, namely the overall control of the Board of Directors, inter linked investment of funds and a consolidated balance sheet and P L A/c. the assessee before us on the contrary is an in individual not subject to a situation as would prev ..... 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