Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 597 - AT - Income TaxPenalty u/s.271(1) - deduction u/s 80P(2)(a)(i) - AO opined that the activity of making investment in mutual funds or income from mutual funds did not fall under the head ‘Business of banking’ as these transactions were not with the members of assessee society and hence no deduction u/s 80P was admissible - HELD THAT:- We do not find much force in the contention of Revenue for the obvious reason that when the business itself was not allowed to be carried on to the assessee, the investment made in mutual funds, etc. cannot amount to fetching business income. Ex consequenti, the profit or loss from transfer of such mutual funds, etc. would fall under the head ‘Capital gains’. On the question of taxability of interest on FDRs with nationalized banks, we hold that the same shall be taken as `Income from other sources’ and cannot be construed as income from business. We, therefore, accord our imprimatur to the finding given by the ld. CIT(A) in this regard. Allowing set off of loss against the income from transfer of capital gains - We hold that the assessee is entitled to set off the loss from mutual funds, etc. against the income from mutual funds, etc. However, this exercise requires examination of the amount of loss incurred from sale of mutual funds, etc. during the year and the amount of loss brought forward from earlier years eligible for set off against income from mutual funds during the year. Such an exercise can be carried out only after considering the break-up of the loss, which information is not available on record. We, therefore, overturn the impugned order on this score and remit the matter to the file of the AO for examining the details of loss incurred by the assessee during the year and that brought forwarded from earlier years and then allow set off in terms of sections 70/71 (for the same year) and section 74 (for the brought forward losses) of the Act. Both the sides agree that the facts and circumstances of the appeal for the later year are mutatis mutandis similar. Following the view taken hereinabove for the A.Y. 2007-08, we hold that income from sale of mutual funds, etc. would fall under the head ‘Capital gains’, interest on FDs, etc. would fall under the head ‘Income from other sources’ and the amount of loss for the year and brought forward loss from sale of mutual funds would be set off in terms of sections 70/71 and 74 of the Act.In the result, these two appeals are partly allowed for statistical purposes. Defective notice u/s 274 - Where the charge is not properly set out in the notice u/s 274 viz., both the limbs stand therein without striking off of the inapplicable limb, but the penalty has, in fact, been levied for one of the two, such a penalty order gets vitiated. Turning to the facts of the extant case, we find from the notice u/s 274 of the Act that the AO did not strike out the irrelevant limb. Respectfully following the Full Bench judgment of the Hon’ble jurisdictional High Court, we affirm the order of ld. CIT(A) in rightly deleting the penalty levied by AO.
|