TMI Blog2010 (4) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... e head income from other sources . The assessee had advanced a loan of ₹ 5 lakhs to M/s.Soorajmull Nagarmull in the year 1959. Due to heavy losses the said debtor firm namely M/s.Soorajmull Nagarmull could not repay the loan together with interest. The assessee filed a suit against the firm before the Hon ble High Court at Calcutta restraining the firm to sale shares and debentures owned by it. Hon ble Calcutta High Court passed a decree against the above firm on 18.9.1969.However, the Hon ble High Court appointed a Receiver and he sold some shares and collected unclaimed dividends of the judgment debtor. Out of sale proceeds, the said Receiver paid a sum of ₹ 11,91,271 to the assessee in the Assessment Year under consideration. Since the assessee incurred expenditure of ₹ 67,020 towards legal fees, the Assessing Officer after allowing the said deduction assessed the sum ofRs.11,24,251 under the head income from other sources . It is relevant to state that the assessee herself offered the said interest income of ₹ 11,91,271 in the return filed and no revised return was filed by her. The assessee disputed the said action of the Assessing Officer only by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the interest income on the loan given to M/s. Soorajmull Nagarmull had been offered by her in earlier years on accrual basis. The reply was in negative. Since, the appellant herself has not offered the interest income on accrual basis in the earlier assessment years, there is no question of advancing the argument that the interest received in the year under consideration was not taxable in this year on receipt basis. I am of the opinion that the appellant has rightly not offered the interest income for taxation on accrual basis because the appellant had filed a suit against the firm before the Calcutta High Court and also obtained a decree. The High Court appointed a liquidator to sell some of the assets of the firm to pay the proceeds to the creditors of the firm. Since the principal amount of loan as well as interest was in dispute and its recovery was dependent on the sale proceeds of the assets of the firm sold by the liquidator, the interest income was not taxable on accrual basis. Accordingly, the appellant has also not offered the interest income in earlier years on accrual basis. But it does not mean that when the amount of interest was actually received by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sold and out of the sale proceeds, the said Receiver disbursed the amount to the assessee in the Assessment Year under consideration. There is also no dispute to the fact that the assessee has shown the said interest income as her income in the Assessment Year under consideration in the return filed and the Assessing Officer also assessed the same as income from other sources. There is also no dispute to the fat that the assessee has not revised her return to contend before the Assessing Officer that the said interest income did not pertain to the Assessment Year under consideration but pertains to the preceding AYs and should have been assessed in the respective AYs on accrual basis. There is also no dispute to the fact that the assessee has not offered this interest income on accrual basis in the preceding Assessment Years. Considering the above facts, we are of the considered view that there is no infirmity in the orders of the authorities below to assess the interest income received by the assessee in the Assessment Year under consideration and after adjusting the expenses incurred by the assessee towards legal fees paid of ₹ 67,020 and to treat the balance amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the learned CIT(A) in confirming the disallowance of ₹ 13,56,841 claimed by the assessee as business loss. 9. The relevant facts are that the assessee is of 65 years of age. In the Assessment Year under consideration, for the first time in her life has stated to have carried on the business of purchase and sales of suiting and shirting. The Assessing Officer observed that the assessee debited an amount of ₹ 37,42,000 on account of purchases of suiting and shirting and claimed to have sold at ₹ 24,86,121. Thus, there was a loss of ₹ 12,55,879 and after claiming certain expenses, the assessee declared loss from business at ₹ 13,56,841. 10. During the assessment proceedings, the Assessing Officer found that the assessee carried on business only for a few days and consisted of total six purchases and six sale transactions. It started on 10.2.2005 and ended on 24.3.2005.The payments for purchases and sales, squared off between 14.3.2005 to 24.3.2005. Further the Assessing Officer has stated that the assessee purchased goods from two parties and sold the same two other parties within a short span and incurred huge loss. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer did not give adequate opportunity of hearing to the assesee. However, the learned CIT(A) did not find substance in the said submission of the assessee and has stated that the Assessing Officer conducted the enquiries to verify the genuineness of the transactions and also allowed opportunity to the assessee to prove the genuineness of the alleged purchases and sales transactions of suiting and shirting materials. The learned CIT(A) has confirmed the action of the Assessing Officer that the business loss was created by the assessee with a motive to set off a substantial amount of interest received by the assessee from Soorajmull Nagarmull in the Assessment Year under consideration. Hence, the assessee is in further appeal before the Tribunal. 13. During the course of hearing, the learned AR of the assessee submitted that the authorities below did not give adequate opportunity of hearing to the assessee to establish the genuineness of the business transactions. He submitted that the assessee genuinely carried on the business of purchase and sales of suiting and shirting. The learned AR of the assessee submitted that the issue could be restored to the Assessing Officer for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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