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2020 (7) TMI 596 - AT - Income TaxInterest income on FDR’s - FDR's pledged for security purposes in obtaining the contract business - whether business income or income from other sources? - HELD THAT:- Undisputedly, the documents now admitted are required to be examined by the Tribunal or by the lower authorities. Since the documents are running into more than 64 pages and we have heard the matter on virtual platform, therefore, the detailed examination of the documents at the stage of Tribunal is not possible. Hence, considering the limitations, we deem it appropriate to remand the matters to the file of CIT(A), pertaining to the issue involved with the direction to examine these documents (1 to 64) filed on 11.07.2019 before the Tribunal in both the appeals , in accordance with law and to find out whether the interest earned by the assessee on FDRs was intrinsically related to the business of the assessee or not. If it is found on examination that the interest income is related to the business of the assessee, the same may be considered as business income and accordingly the income of the assessee is computed by applying the NP rate. CIT(A) is duty bound to grant personal hearing and opportunity to the assessee as well as Assessing Officer, from whom CIT(A) may also seek remand report from Assessing Officer, if required. The ld. CIT(A) shall also consider various decisions relied upon by the assessee including the decision of Tribunal in the assessee’s case for earlier years. Computation of taxable income - HELD THAT:- We direct the Assessing Officer to compute the taxable income of the assessee after giving benefit of interest to partners ,remuneration to the partners and depreciation. The taxable income of the assessee would be subject to outcome on the issue of interest on FDRs. NP rate @ 8% - HELD THAT:- In the present case, the assessee relied upon his own cases for the subsequent years .Though found that the assessee has not challenged the NP rate of 8% applied for assessment year 2012-13 and 2013-14 in which the turnover of the assessee was 17.17 crores and 22 crore respectively, whereas the turnover in the present year was 19.27 crores. However considering the peculiar facts and circumstance of the case we restrict the net profit rate to 7.75% instead of 8% as held by the lower authorities. In the result the relevant ground of appeal of assessee is, accordingly, partly allowed.
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