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2019 (3) TMI 684 - AT - Income TaxInterest income - Correct head of income - income from other sources OR income from business - AO treated the lending of money as an independent and unrelated activity and consequently the interest on said lending was treated as income from other sources - HELD THAT:- We find that it is not a case of interest income earned by the assessee which is incidental to the business activity of the assessee but the assessee has given the loans in the market for earning the interest and therefore, the interest was earned by the assessee on intentional activity of lending. It is not a simple case of parking the money in the bank but the assessee has deliberately given the advances in the market for earning the interest. Hence, we concur with the view of the AO on the point that the interest earned by the assessee from giving loan by the assessee in the market is income from other sources and not the business income. Set off of business loss against the interest income as per the provisions of Section 71 - HELD THAT:- Since the assessee already commenced the business in the F.Y. 2005-06 and has now incurred expenditure on account of advertisement, exhibition, consultancy charges which are an allowable business expenditure, then the said business expenditure will be business loss for the year under consideration for want of any business income and consequently the interest income assessed as income from other sources would be set off against the business loss as per the provisions of Section 71. Therefore, we find merits in the alternative contention of the ld AR that the business loss can be set off against the interest income. We direct the Assessing Officer to allow the interest income to be set off against the business loss in the shape of the expenditure subject to the verification of the fact that the said expenditure has not been added to the cost of the project in the subsequent year. Appeal of the assessee is partly allowed.
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