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2022 (10) TMI 393 - AT - Income TaxCorrect head of income - Income From Other Sources v/s income from business - interest income arising from Bank Fixed Deposit (F.D) - HELD THAT:- We find that in Total Commodities India Pvt. Ltd. [2017 (4) TMI 1603 - ITAT MUMBAI] after taking note of various judicial precedents held that where out of business necessity, if funds are deployed by the assessee in fixed deposits for opening Letter of Credit / procuring Bank Guarantee / margin money, etc., as a necessity of business, then, in that eventuality, the interest earned on such funds is to be taxed under the head “Income From Business” and not under the head “Income From Other Sources” In the present case, it has not been disputed by the Revenue that overdraft facility availed by the assessee was for the purpose of its business. The said interest income has been earned by the assessee in the course of its business and also to raise funds for running the said business, hence, the said interest income is linked to the business activities of the assessee. Therefore, we are of the considered view that interest earned on Bank F.D. is in the nature of income from business - Assessee appeal allowed. Disallowance of remuneration paid to the partners - HELD THAT:- AO treated the interest earned on Bank F.D. as “Income From Other Sources” and accordingly, excluded the same for the purpose of working of book profit of the firm. As a result, the Assessing Officer disallowed remuneration and added the same to the total income of the assessee. Since we have allowed ground raised in Assessee’s appeal and have held that the interest on Bank F.D. is in the nature of Income From Business, therefore, the Assessing Officer is directed to delete the disallowance out of remuneration paid to the partners. Assessee appeal allowed. Disallowance of expenses to 10% in the absence of any supporting material - HELD THAT:- We find that even now, the assessee has not substantiated by way of any cogent evidence that these expenses were entirely incurred for the purpose of business. Accordingly, we find no infirmity in the impugned order passed by the CIT(A). As a result, ground in assessee’s appeal are dismissed.
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