The Tax Publishers2021 TaxPub(DT) 0258 (Mum-Trib)

INCOME TAX ACT, 1961

Section 14

In assessment year 2011-12 [ITA Nos. 1513 & 1514/MUM/2016 and ITA No. 1578/MUM/2016, dt. 23-4-2018], identical issue had come up before the Tribunal in an appeal by Revenue and Tribunal decided the issue in favour of assessee further CIT(A) held that interest income earned by assessee was to be taxed under the head 'Business Income', therefore, interest income from money lending business was to be treated as business income.

Head of income - Income from other sources or Business Income - Interest income -

Assessee was a share broker and investor and was also engaged in money lending business. He earned interest income from money lending business. The assessee offered aforesaid interest income under the head 'Income from business'. AO in scrutiny assessment proceedings recharacterised the nature of interest income of assessee as 'Income from other sources'. Assessee submitted that in earlier assessment years, the assessee was offering interest income from money lending business as 'Business income'. AO in assessment made under section 143(3) accepted the same in assessment years 2007-08, 2008-09 and 2010-11. However, in assessment years 2011-12 and 2012-13, AO changed the head of income and assessed interest income earned by the assessee under the head 'Income from other sources'. Held: This issue of assessee declaring interest income from money lending business under the head 'Business income' and AO disputing the same holding the interest income under the head 'Income from other sources' was recurring in the past couple of assessment years. In assessment year 2011-12 [[ITA. Nos. 1513 & 1514/MUM/2016 and ITA. No. 1578/MUM/2016, dt. 23-4-2018]] identical issue had come up before the Tribunal in an appeal by revenue and Tribunal decided the issue in favour of assessee. CIT(A) accepted the contentions of assessee and held that interest income earned by the assessee was to be taxed under the head 'Business Income'. Therefore, interest income from money lending business was to be treated as business income.

Followed:Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 858 (SC), CIT v. Padma S. Bora (2014) 54 Taxmann.com 319 (Bom) and Bharat Jayantilal Patel v. Addl. CIT [ITA.No. 1513 & 1514/MUM/2016 And TA.No.1578/MUM/2016, dt. 23-4-2018].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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