Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1606 - AT - Income TaxCorrect head of taxability of interest income - business income or income from other sources - HELD THAT:- From the copy of the certificate issued by the Bank of India, Angul Branch, the assessee firm had availed overdraft facility from the bank which was sanctioned in the financial year 2011-2012 against the pledged of fixed deposit by the assessee firm and overdraft amount was used by the assessee firm for the purpose of business and interest was also paid thereon. In this situation, earning of impugned interest on fixed deposit is inextricably linked with the business activity of the assessee and the impugned interest income has to be treated as business income of the assessee and the same cannot be put under the head “income from other sources‟ in spite of fact that the assessee has shown this interest income in the profit and loss account and has not shown any amount as income from other sources. Accordingly, ground of the assessee is allowed and the AO is directed to treat the interest income on fixed deposit as business income - Decided in favour of assessee. Best judgment assessment u/s 144 - treated the status of the assessee firm as AOP on the ground of non-compliance of notices - denying deduction of salary and interest to partners u/s.184(5) - double tax as the partners have offered the interest and salary income in their return - HELD THAT:- Lucknow Tribunal in the case of Surendra Prasad Misra [2005 (9) TMI 267 - ITAT LUCKNOW-A] held that mere non-cooperation of the assessee making it difficult to determine the correct income may justify an assessment u/s.144 but that by itself is not sufficient to assess the firm as an AOP u/s.184(5). Disallowance u/s.184(5) does not have a cause and effective relevancy with the assessment framed u/s.144 and this provision can be invoked only as a result of assessee‟s committing any failure as mentioned u/s.144. Considering the totality of circumstances of the present case and the allegation leveled by the AO in the assessment order against the assessee, I am of the considered view that the AO has merely erred in taking provisions of Section 184(5) without any justified and reasonable basis and without bringing any specific allegation of non-compliance against the assessee. There was some non-compliance on the part of the assessee but while invoking provisions of Section 145(3) and proceeding to frame assessment u/s.144, the AO has not alleged any other notice except notice dated 03.11.2014 and notice dated 23.01.2015. As regarding notice dated 03.11.2014, there is no mention of any non-compliance in the remarks column as mentioned in the assessment order by the AO and in respect of notice dated 23.01.2015 the AO himself noted that the assessee produced bank statement, list of sundry debtors and the assessee did not file reply of questionnaire and documents called for but the AO has not alleged that the assessee did not produce books of accounts as required by the said notice. In these circumstances, invoking provisions of Section 184(5) cannot be held as justified - Decided in favour of assessee.
|