TMI Blog2015 (9) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... lending operation under the head Profit and Gains from Business and Profession or Income from Other Sources - Hel that:- CIT (A)’s decision, in treating the interest income earned on money lending operation as Profits & Gains of Business or Profession’, is reasonable and it does not call for any interference. In this regard, we have considered ‘object clause’ authorizing the assessee to conduct the business of money lending and the entries in the books of accounts and the bank accounts. Accordingly, ground raised by the Revenue is dismissed - ITA No. 2326/Mum/2014 - - - Dated:- 29-9-2015 - S/Sh. Rajendra, Accountant Member Saktijit Dey, Judicial Member Assessee by : Mr. V. Mohan Revenue by : Dr. Santosh Mankuskar-DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit u/s.115JB as per clause (f) of Explanation-1. 4. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in treating interest earned on money lending operation of ₹ 3,52,14,074/- under the head Profit and Gains from Business and Profession instead of Income from Other Sources treated by the AO without appreciating the fact that the assessee is not an NBFC and hence giving loans and advances to other parties cannot be considered as business activity. 5. The appellant prays that the order of CIT (A) on the above ground be set aside and that of 6. The appellant craves leave to amend or alter any ground or add a new ground which may necessary Assessee-company, engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate authority, assessee made various submissions about the need for computing the disallowance for the AY 2008- 2009 and as per Rule-8D of the IT Rules read with judgment of the jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra). Assessee furnished the computation as per Rule-8D for the AY 2008-2009 and submitted that by applying the formula as per Rule-8D(2)(iii), the disallowance works out to ₹ 4,04,568/- only. Thus, the assessee computed the disallowance on accounts of clause (ii) and (iii) of Rule 8D together should be only to the tune of ₹ 16,91,489/-. CIT (A) considered the above calculations and confirmed the disallowance u/s 14A of the Act amounting to ₹ 16,91,489/-. Assessee got par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore restricting the disallowance as held by the CIT (A). 5 In this regard, we confirm the order of the CIT (A) in substance and therefore, it does not call for any interference. Accordingly, ground no.2 3 raised by the Revenue are dismissed. We find that the First Appellate Authority(FAA) has followed the above order of the Tribunal and deleted the interest expenditure of ₹ 78,36,495/-.He restricted the administrative expenditure to ₹ 6,36,389/-.He found that the assessee had debited expenses of ₹ 6.72 lakhs and it included expenses of ROC filing fees(Rs.8,500/-),Audit Fees(16,545/-)and tax audit fee(Rs.11, 030/-).Considering the above, he restricted it to ₹ 6.36 lakhs. In our opinion, the order of the FAA does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we confirm his order and decide ground no.3 against the AO. 6. Last ground of appeal deals with treating interest earned on money lending operation of ₹ 3, 52,14,074/- under the head Profit and Gains from Business and Profession instead of Income from Other Sources. We find that identical issue was decided by the Tribunal, while deciding the appeal for the AY.2008-09.We would like to reproduce the relevant part of the order and same reads as under: AO observed that the assessee is not engaged in the business of money lending. Therefore, the AO treated the interest income of ₹ 1,25,22,877/- earned during the year as income from other sources. Aggrieved with the above disallowances made by the AO, assessee filed an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year also indicate that the activity of money lending was a real and substantive activity. The rates of interest at which monies were borrowed in comparison to the rates of interest at which monies were lent indicate that the activity was carried on with a motive of making profit. In these circumstances, the decisions of the Hon ble Supreme Court in Narain Swadeshi Weaving Mills vs. Commissioner of Excess Profits Tax (26 ITR 765) and in Sole Trustee Loka Shikshana Trust vs. CIT (101 ITR 234) defining the term business , are clearly satisfied. Consequently, the interest earned on money lending operation of ₹ 1,25,22,877/- arose from a systematic and organized activity carried on with a motive of profit and hence ought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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