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2014 (12) TMI 511 - ITAT COCHINInterest and lease charges written off disallowed income assessed as income from other sources - Held that:- In order to determine the head of income under which the income generated out of a particular activity is assessable, one has to look into the intention of an assessee at the time when he started that activity - If the intention is to carry on that activity as a sustained business activity, then the income arising there from is assessable under the head "Income from Business" - the assessee has been declaring the interest income and lease rental income under the head "Other sources" only in the earlier years - the assessee has not advanced funds or leased out machineries to any other concerns or parties - there was no intention with the assessee to carry on business of either giving loans on interest or in leasing out its machinery - the assessee has changed its stand only during the year under consideration and further it did not bring any material on record to show that the assessee intended to carry on the activity of advancing money or leasing out plant as a sustained business activity. The assessee has declared both the interest income and lease rental income under the head "Other sources" would show that the intention of the assessee was only to carry those activities as an investment activity only - the treatment given by the subsidiary company cannot decide about the taxability in the hands of the assessee - The assessee also has taken a stand that the business proximity of the assessee with its subsidiary and the vested interest in the welfare of the subsidiary are the factors that will go to decide the nature of interest and lease rental income - the intention of the assessee at the inception of the activity would decide the nature of the activity and not the close business connection or the welfare of the recipient. The contention of the assessee is accepted that the interest income and lease rental income should have been assessed under the head "Income from business" the AO was justified in assessing both the income under the head "Income from other sources", as declared by the assessee - the view of the AO is accepted that the amount written off by the assessee cannot be considered as expenditure incurred wholly and exclusively for the purpose of earning of income, which is included in the computation of income under the head "Income from other sources" the order of the CIT(A) is set aside Decided in favour of revenue.
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