Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 751 - AT - Income TaxDisallowance of business loss - assessee has not carried out any business activity during the year under consideration - Held that:- The facts and circumstances prevailing over the disputed year, as emerged from the record before us, are that during this year, the assessee has not shown any business income but has declared business loss; that during this year, the assessee has not shown any business of Vyaj Badla; that during this year, the AO has noticed that the assessee has not carried out any business activity and that the interest income earned by assessee is declared on own funds. Besides this, schedule -5 of the balance sheet of assessee as at 31st March, 2006 filed before us shows that the assessee has shown a sum of ₹ 17,94,28,895/- under the head ‘Investments’. The balance sheet further shows that as per schedule-6, under the current assets, loans and advances, three items are appearing. It is, however, not clear from the balance sheet and profit and loss account filed before us, as to from which heads of above current assets, the assessee has earned interest income so as to decide the correct nature of interest income. So, proper examination is required on this count at the stage of Assessing Officer. If the impugned interest is found to have been earned by assessee from investments as per schedule-5 of the balance sheet, such interest income cannot be treated as business income as per Generally accepted Accounting Principles (GAAP) and if it is found that the said interest income was earned by assessee out of their current assets, loans and advances as per schedule 6 of the balance sheet then the Assessing Officer has to examine whether such loans and advances were the part of prominent/auxiliary nature of business. If the same are found to be the part of prominent/auxiliary nature of business, the interest income earned therefrom, shall be qualified to be treated as business income, irrespective of the fact that the assessee has not done any business of Vyaj Badla during the disputed year. It is also to note that in case all the facts and circumstances emerged during the investigation by AO, are found prevailing over the previous and subsequent years, as contended by assessee, the assessee’s claim will be eligible for allowance by applying the rule of consistency and if found otherwise, or if there is any change in the circumstances, the issue shall be decided in accordance with law whether the interest income earned by the assessee should be treated as business income or not. - Decided in favour of assessee for statistical purposes
|