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2020 (7) TMI 129 - AT - Income TaxCorrect head of income - Interest from Fixed deposits made in connection with Contract business - income from ‘Other sources’ or ‘Business income’ - HELD THAT:- As noted that though the assessee has replied to the AO vide dated18-12-2017 the aforesaid facts like the FDR was used as security for obtaining the contract and was essential condition for bagging the contract, however, the assessee has not bothered to give any material/evidence to show that the interest accrued on the FDRs/deposit was incidental and that the main purpose of FDR’s was it was a condition for getting the contract or to avail the bank guarantee/security deposit/ E-money/tender money etc. As noted that the assessee only made these contentions, but failed to produce any material to substantiate his contention that the interest accrued from FDR should be treated as income from business. As noted that there is shortfall of (₹ 93,46,927 – ₹ 91,65,482)= ₹ 2,31,445/- because even if the contention of assessee is correct, then he should have shown the contract/business income at ₹ 88,00,954 + ₹ 5,45,973= ₹ 93,46,127.80, thus there is a clear shortfall of ₹ 2,31,445/-. Set aside the impugned order of the ld. CIT(A) and remand the matter back to the AO with a direction to examine the matter afresh regarding the characterization/nature of receipt in the light of the above mentioned case laws as well as the facts which the assessee bring to the notice of the AO. And if the assessee brings the notice of AO the terms of contract etc and is able to show that the FDR’s in question was essential/necessary for obtaining the contract, then the interest income from these FDRs to be treated as business income and if the assessee fails to do so, then AO is at liberty to treat it as income from Other Sources and assessment may be framed in accordance to law. - Appeal of assessee is allowed for statistical purpose.
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