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Commissioner of Income Tax I, Ludhiana Versus Shri Ramesh Gupta C/o M/s RK Cloth Mills

2015 (10) TMI 2058 - PUNJAB & HARYANA HIGH COURT

Treatment to interest income - business income or income from other sources - ITAT allowing the B/F loss to be set off against the income which was not allowed by the AO - Held that:- even a single or isolated transaction can constitute business if it bears a clear indicia of trade, although the activity would normally be systematic and organized characterized by a course of dealing. Identical ratio was laid down by the Hon'ble Madras High Court in the case of CIT vs. R.M. Meenakshi Sundram (199 .....

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f the revenue is also having no merit, therefore, dismissed

Once it has been held that the income of the assessee was to be assessed under the head income from business or profession, the assessee was thus entitled to set off against carry forward losses. The Tribunal was justified in allowing the same. Even for the subsequent assessment year i.e. 2005-06, the interest income was accepted as income from business or profession. Learned counsel for the appellant has not been able to sho .....

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ome Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh in ITA No.503/Chandi/2008, for the assessment year 2004-05, claiming following substantial questions of law:- "i) Whether the Hon'ble ITAT was right in facts and circumstances of the case in treating interest income as business income instead of income from other sources? ii) Whether the Hon'ble ITAT was right in law and facts in allowing the B/F loss to the tune of ₹ 17,50,833/- to be set off against the inc .....

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ward business losses were not allowed to be set off against this income. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 28.3.2008, Annexure A.II, the Assessing officer treated the interest income as income from business and also allowed the set off of the brought forward losses amounting to ₹ 17,50,833/-. The revenue went in appeal before the Tribunal. Vide order dated 31.7.2008, Annexure A.III, the Tribunal dism .....

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, the Assessing Officer himself had recorded that during the assessment year 2004-05, the assessee had earned income of ₹ 18,18,134/- from money lending business. The relevant findings read thus:- "The affairs of the assessee during the preceding and succeeding assessment years also need to be observed to reach a logical conclusion. As already mentioned above, vide letter dated 26.2.2008, the learned counsel has intimated that the AO while framing the assessment order under section 14 .....

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affairs of the assessee during the preceding and succeeding assessment years also need to be observed to reach a logical conclusion. As per information supplied by the assessee himself, during the preceding assessment year, he was engaged in the business of money lending. He had shown an income of ₹ 18,18,134/- from that business for the assessment year 2004-05. It may not be out of place to mention that during that year also, he was the only working partner of M/s R.K.Cloth Mills. For the .....

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he has been utilizing his time and attention in other business activities, may be money lending share trading. During the preceding years when the assessee was carrying on the business of money lending, he was occasionally making investments in share and it could be said that dealing in shares was for investment purposes and not as regular business activity." Therefore, once the AO is himself accepting that the assessee is engaged in money lending business and he has made a categorical obse .....

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ctivity, the claim of the appellant that the income earned during the relevant previous year from interest is the income from business and profession has to be accepted. This ground of appeal is therefore allowed." 5. The Tribunal affirmed the order of CIT(A) with the following observations:- "15. The first ground raised by the revenue in treating the income earned from money lending as business income, therefore, is identical to the ground raised in the above appeal. The only differen .....

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