TMI Blog2016 (9) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... iness apart from being unbelievable is highly deplorable as a US citizen cannot be supposed to violate Indian Laws, i.e., Gujarat Money-Lenders Act and FEMA regulations. The Assessing Officer has been more than reasonable in not intimating these facts to concerned authorities; otherwise, the assessee would have been in deep trouble. (3) Assuming the assessee was into illegal money lending business then also in view of the Explanation 1 to Section 37, the assessee’s business being an offence and prohibited by law, the expenditure cannot be allowed. In view of the above, I have no hesitation to uphold the orders of the authorities below. - Decided against assessee. - ITA No. 3567/Ahd/2015 - - - Dated:- 3-8-2016 - SHRI R.P. TOLANI, JUDIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,61,489/-, if the interest income ₹ 14,90,974/- is being assessed under the head of income from other sources'. 3. Brief facts are the assessee is a NRI, citizen of USA and claimed to have carried on money lending as business activity in India holding any money lending license or RBI approval for the same. The assessee filed return of income showing income from business, LTCG and income from other sources. The case was selected for scrutiny assessment through CASS, notice u/s 143(2) was issued and assessment was framed after due opportunity of hearing to the assessee. Ld. AO found that assessee had shown interest income as income from other sources in the return of income, however had also claimed business expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. The AO has very categorically pointed out that all the receipts of the appellant are in the nature of income from other sources and this claim of expenses being business expenses is untenable. Vide para 5.9(b), the AO has brought out the illegitimacy of the money lending activity purportedly carried out by the appellant. I am in agreement with the observations of the AO which are quite detailed and even reproduced supra. The disallowance made by the AO amounting to ₹ 11,61,489/- is therefore, sustained. The ground of the appellant is therefore dismissed. 5. Aggrieved, the assessee is in second appeal. 6. At the time of hearing, ld. Counsel for the assessee requested for admission of additional ground as under:- Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. iii) The assessee was well aware of these instructions dated 26.09.2014. No objection was raised either before the Assessing Officer in this behalf, though the assessment order is dated 20.02.2015 and Ld. CIT(A) whose order is passed on 04.11.2015. The assessee deliberately did not raise any objection before the lower authorities and to avoid the consequences of notorious facts of his case the additional ground is raised with ulterior motive to distract the attention. iv) In NTPC judgment (supra) the assessee became aware of new ground after a Special Bench judgment whereas in case assessee was already aware of instructions, no reasonable cause has been spelt out for admission of additional ground. 6.3 I have heard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Competent Authority may penalize the defaulter and on payment of penalty the person can get the registration. But, without license the business is to be treated as illegal business. Money lending is not a prohibited business only non obtaining of license is subject to penal consequences. 7.2 RBI in a series of frequently asked questions on NBFCs, by question and answer No.35 has clarified as under:- Question No.35 There are some entries (not companies) which carry on activities like that of NBFCs. Are they allowed to take deposits? Who regulates them? Answer : 35 Any person who is an individual or a firm or unincorporated association of individuals cannot accept deposits except by way of loan from relatives, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vail unjustifiable claim the expenditure wantonly debited it to business head and endeavored to reduce its tax liability which is not permissible. Both the authorities below have given categorical findings that a US citizen cannot be permitted to carry out illegal money lending business without prior approval of the RBI or valid license. The assessee neither applied for license nor RBI approval, it clearly demonstrates that assessee was no carrying on any alleged illegal money landing business which is corroborated by computation of income filed along with return by assessee declaring the interest income as income from other sources. 8.1 Carrying out any business which is an offence or is prohibited by law, no expenditure is allowable in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
