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2017 (8) TMI 1696 - AT - Income TaxCharacterization of income - Interest income - income from other sources or business income - CIT-A treating in interest income as business income - Whether no business activity was carried out during the year? - HELD THAT:- We find that the AO has not made any inquiry or verification to arrive at his finding that interest income was to be treated as ‘income from other sources’. As mentioned by the Ld. CIT(A) in the assessee’s own case for the AY 2006-07, 2007-08 and 2008-09, the AO has accepted the contention of the assessee that the income of investing and financing be assessable as income from business. The need for consistency has been emphasized by the Hon’ble Supreme Court in Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] - we uphold the order of the Ld. CIT(A) and dismiss the 1st ground of appeal. Disallowance of Expenses as no business activity was carried out by the assessee during the year - HELD THAT:- A company may not obtain, or able to execute, a single business contract for months and yet it may be deemed to carry on its business, if during the period of lull and inactivity it is kept alive and if it retains its registered office and holds meetings. It is not necessary that a business to be in existence should have work all the time. There may be long intervals of inactivity and a concern may still be a going concern, though it may, for some time, be quiet and dormant. The mere fact that a businessman has not been able to obtain a contract and the business has for some time been in that sense dormant would not mean that it has ceased to exist, if the assessee continues to maintain an establishment and incur expenses in the expectation that work would come and the business would be successful - Thus we find that the disallowance made by him is not based on any material or reasons. 2nd ground of appeal is dismissed. Addition made of account of interest - as per TDS certificate the interest income pertained to A.Y. 2009-10 - HELD THAT:- We find that interest of Rs.20,80,817/- out of Rs.26,90,478/- on account of interest received from Patel Engineering Ltd. was offered to tax in the AY 2008-09. Also M/s Patel Engineering Ltd. was given the interest, net of TDS, of Rs.20,80,817/- on 03.10.2007 vide cheque no. 143318. Therefore, the Ld. CIT(A) has rightly directed the AO to delete the addition to the extent of Rs.20,80,817/- out of Rs.26,90,478/-. Also the Ld. CIT(A) has rightly sustained the addition of the balance amount of Rs.6,09,661/- being the amount of TDS deposited by the payer namely Patel Engineering Ltd. during the AY 2009-10. Thus we uphold the order of the Ld. CIT(A) on the above ground and dismiss the 3rd ground of appeal. Disallowance u/s 40(a)(ia) - submissions made by the assessee at the time of appellate proceedings without giving an opportunity of the assessing officer for verification of the same - CIT(A) has held that perusal of the expenditure claimed as deduction revealed that tax is deductible only on the interest expenditure of Rs.6,18,131/- (Rs.5,95,837 + Rs.23,904) as all other expenditure incurred is below threshold for deduction of tax at source and TDS has been made in the case of interest payment to Ace Housing and Construction Ltd., AHCL PEL - HELD THAT:- CIT(A) Correctly deleted the disallowance u/s 40(a)(ia) - order of the AO in respect to the above ground of appeal is not based on material evidence - findings of the Ld. CIT(A) based on examination of the documents, we uphold the order of the Ld. CIT(A) and dismiss the 4th ground of appeal.
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