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TMI Blog2015 (2) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... l bearing ITA No.4943/M/2010 for assessment year 2005-06. ITA No.4943/M/2010 for assessment year 2005-06: 3. The assessee has taken the following grounds of appeal: "The Hon'ble Commissioner of Income Tax (Appeals) has erred in confirming the order of the learned assessing officer concluding that there is no business activities carried out and in absence of the same, no business loss or income can be computed. It is however submitted that appellant is running the finance business and has earned Interest Income as well as Hire Charges Income in relation to such finance business. It is therefore submitted that direction should be given in this regard. 2. The Hon'ble Commissioner of Income Tax (Appeals) has erred in confirming orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for disposal. The Assessing Officer (hereinafter referred to as the AO) noted that the assessee during the year had not carried out any business activity. He therefore disallowed the various expenses claimed by the assessee. The Ld. CIT(A) also confirmed the said findings of the AO. 5. Before us, the Ld. A.R. of the assessee has submitted that in the subsequent assessment years, the carrying out of business activity of the assessee has been accepted by the AO. He has brought our attention to the assessment order for assessment year 2008-09 pursuant to scrutiny assessment proceedings under section 143(3) of the Income Tax Act, wherein, the AO has accepted the carrying of the business activity and even has allowed the net loss as per P & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently been treated as 'business income'. The furniture and fixtures were rented out temporarily when the same were not in use and such a claim had never been disallowed in the past. The assessee had no intention to get the rental income but it was for the purpose of utilizing the infrastructure which was for the time being not in use. The said assets had been entered in the block of assets. Even the said assets have been disposed of by the assessee in the subsequent financial year relevant to assessment year 2006-07. 7. Keeping in view of the facts of the case, we find that the furniture and fixtures were rented by the assessee temporarily and the same have already been disposed off during the next financial year. Hence, keeping in view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as 'business income' whereas the interest income is directed to be treated as income from 'other sources'. 11. Another ground taken by the assessee during the year is relating to disallowance under section 14A of the Act. The AO noted that the assessee had borrowed funds of Rs. 7,19,000/- whereas the investment in shares was worth Rs. 1,96,64,136/-. He therefore held that the assessee had utilized the borrowed funds for the purpose of investment, out of which, the assessee had received dividend income of Rs. 6,89,210/-. He therefore disallowed the interest expenditure of Rs. 85,729/- debited into the P & L account under section 14A of the Act. The Ld. A.R. of the assessee has submitted that the assessee had given a working of disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to place on record all the relevant facts including his accounts and recording of reasons by the AO in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee. 13. However, a perusal of the assessment order reveals that the AO has not followed the guidelines of objective satisfaction as laid down by the hon'ble Bombay high Court in the case of Godrej & Boyce (supra) while making the disallowance . He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions of section 14A of the Income Tax Act. The Ld. CIT(A) also ignored the mandate of the provisions of section 14 A, while ..... X X X X Extracts X X X X X X X X Extracts X X X X
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