TMI Blog2020 (12) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... e should have broken the fixed deposit assessee would have been penalized for the premature realisation of interest. The fact that the rate of interest charged upon the pledge of fixed deposit is linked to the rate of interest accruing on the fixed deposit has been totally ignored by the authorities below. Moreover the fact that this interest was being treated as income from business in the earlier years has been ignored by the authorities below. It is settled law that de horse change in facts or law, the view taken in the earlier years should not be disturbed. This view was expounded by the honourable Supreme Court in the case of Radha Swami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] and reiterated in the case of Excel Industries [ 2013 (10) TMI 324 - SUPREME COURT] . Hence, in our considered opinion the view of the authorities below to treat the said interest as income from other sources is not sustainable. Accordingly, we set aside the orders of authorities below and decide the issue in favour of assessee. Treatment of loan - A.O. added the said amount to the income of the assessee, treating the same as Income from other sources - HELD THAT:- In view of the diverge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- (i) The Id. CIT(A) erred in confirming the addition of unadjusted opening credit balance as allegedly unexplained and liable to be taxed as deemed income without appreciating that when in earlier years, the same credit balance had been accepted by the Assessing Officer, no addition of same could be added unjustly in the subsequent year; hence, the addition may be deleted as on merits, as it is not a case u/s. 68 nor under any other section. (ii) The Id. CIT(A) failed to appreciate that the amount received, from Mr. Amit Ruparel to meet pending electricity expenses of tenants, was pending for future adjustment; hence no addition is called for in the hands of the Appellant and the same may be deleted. (iii) Without prejudice to the above, as the statement, if any, recorded was not confronted with the appellant, the addition made may be deleted. 3. Levy of Penal Interests The Appellant, on merits, denies her liability to penal interest. Apropos the issue of treatment of interest received as income from other sources. 3. Brief facts of the issue are as under: During the course of assessment proceedings, it was seen by the A.O. that the assessee had receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Proprietor as of 31.03.2013 was ₹ 67,28,676/-. This clarifies that the funds were not diverted out of the business, therefore, the net interes charged on OVERDRAFT ACCOUNT in excess INTEREST EARNED ON F.D. to be considered instead of GROSS So interst on said FD should be considered as bUsiness Income only and Bank OD Interest should be allowed as Business Expenditure. Therefore, by any stretch of imagination the said FD Interest cannot be taxed as income from other sources. Therefore, FIXED DEPOSIT CANNOT BE READ IN ISOLATION BUT THE SAME SHOULD TO READ WITH THE OVERDRAFT, SINCE IT IS PLEDGE WITH BANK. Since the fixed deposit was business asset and the interest earned and paid to the bank is business transactions only so the same should be allowed as business income and overdraft interest paid to bank as bsiness expenses as claimed in the financial statements. Furtehhr, if you are opting to tax under the head INCOME FROM OTHER SOURCES then the OVERDRAFT INTERST PAID TO BANKERS SHOULD BE ALLOWED U/S. 57, since for earning the deposit interest out client had paid OVERDRAFT INTEREST .. 4. However the assessing officer was not satisfied. He rejected the above contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable. Accordingly, we set aside the orders of authorities below and decide the issue in favour of assessee. Apropos the issue of treatment of loan of 15 lac 7. Brief facts on this issue are as under: During the course of assessment proceedings, it was seen by the A.O. from the balance sheet of the assessee for the year under consideration tha the assessee had shown loan of ₹ 15,00,000/- from Shri Amit Ruparel. During the course of assessment proceedings, a notice u/s.133(6) dated 16.2.2016 was issued to the said party asking for confirmation of transaction. In response to notice u/s. 133(6), Shri Amit Ruparel submitted his reply before the A.O. on 04.03.2016 and that the amount of ₹ 15,00,000/- has been paid to the assessee for acquiring her share in the firm. In view of the above the assessee was asked by the A.O. to explain as to why the same should not be treated as assessee s income and added to the total income. In response to the above mentioned show cause letter of the A.O., the AR of the assessee made written submission before A.O. vide letter dated 11.3.2016. The AR of the assessee submitted that an amount of ₹ 15 lacs were received from Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the authorities below and the grounds of appeal taken by the assessee. The assessee submits that it was a loan taken in the earlier year. Assessee has submitted before the assessing officer that it was received from Shri Amit Ruparel as consideration of retirement from partnership firm. The assessee then changes the stand and submitted that the settlement of partnership dues has not been finalised. Then in the grounds of appeal it is urged that the said amount has been taken as loan for payment of electricity bill et cetera. The authorities below have also erred in treating the same as income from other sources ignoring the fact that the said loan was not taken this year. 11. In our considered opinion, in view of the divergent stand of the assessee we deem it appropriate to remit the issue to the file of assessing officer. Assessing officer should consider the issue de novo after making appropriate enquiries. The assessing officer is also directed to consider the issue under the sanguine provisions of law which he proposes to invoke. Accordingly, this issue stands remitted to the file of assessing officer. Needless to add assessee should be granted adequate opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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