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TMI Blog2002 (7) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8(3) of the Interest-tax Act. 2. The learned counsel for the assessee submitted that the learned AO in his order considered the financial statement of the assessee and in view of s. 2(5B)(iv) considers the assessee's income as business of providing finance whether by making loans and advances or otherwise. He, therefore, proceeded to consider his own application of mind in applying earning of interest as that of credit instituted as per s. 2(5A) of the Interest-tax Act. He, therefore, completed the assessment ex parte under s. 8(3)of the Interest-tax Act which the learned CIT(A) on examination of assessment record inclined to agree with the finding of the AO. He submitted a paper book wherein copies of balance-sheet and P L A/c were app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed trading business by dealing in paper which fact has not been dealt with by the lower authorities at all. The amounts of interest received were from the closely-held companies to whom the amounts had been advanced and, therefore, there was never a case where the assessee-company was making available as a principal business, the business of providing finance. He, therefore, submitted that there was no basis before the authorities below to assume that the assessee-company is an investment company which is mainly trading company duly registered with the West Bengal Sales Tax Act to deal in paper goods. 3. The learned Departmental Representative submitted that the learned AO in his order had categorically found from the balance-sheet that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned AO. proceeded to base his observation read with s. 2(58)(iv) of the Interest-tax Act by considering the capital against loans and advances. In our view, this method is erroneous inasmuch as the funds diverted were available after having conducted the principal business of trading in paper by the assessee-company. The assessee holds West Bengal Sales-tax Registration which clearly indicates that they are not advancing loans as principal business which has been misconstrued by the AO as real, substantial, systematic and organised course of activity and are conducted for the said purpose of earning profit or income. We find force in the submissions of the learned counsel here wherein the total advance had been made to sister-concerns in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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