K.S.R. Financial Consultants & ... vs Assessee
- CitationI.T.A. No.6593/Mum/2013
Ratio decidendi
The rule this decision rests on
The revenue authorities, having accepted the assessee's business activity as finance and taxed the same single source of income (interest) as business income in an earlier assessment year, cannot take a different stand on the same source of income in a subsequent year; such a departure from the earlier accepted position is contrary to the rule of consistency, and the matter is therefore to be determined on the basis that the interest income is business income with administrative and financial expenses allowable under section 37(1).
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
सव ी आय.पी. बंसल, या यक सद य एवं नरे कुमार ब लै या, लेखा सद य के सम
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND
SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
आयकर अपील सं/ I.T.A. No.6593/Mum/2013 ( नधारण वष / Assessment Year : 2009-10 M/s. K.S.R. Financial बनाम/ The ITO 1(2)(2), Consultants & Investors Aayakar Bhavan, Vs. Pvt. Ltd., Mumbai-400 020 C/o H.N. Motiwalla & Co., 508, Sharda Chambers, 33, New Marine Lines, Mumbai-400 020 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACK 4213E (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से/ Appellant by: Shri H.N. Motiwalla यथ क ओर से/Respondent by: Shri Asghar Zain
सन ु वाई क तार ख / Date of Hearing :24.06.2015 घोषणा क तार ख /Date of Pronouncement :24 .06.2015
आदे श / O R D E R
PER N.K. BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the Ld. CIT(A)-20, Mumbai dt. 5.8.2013 pertaining to assessment year 2009-
10.
2. The sum and substance of the grievance of the assessee is that the Ld. CIT(A) erred in confirming the order of the AO in respect of taxing 2 ITA. No. 6593/M/2013
interest income under the head "Income from other sources and by doing so denied all administrative expenses and financial expenses as claimed by the assessee.
3. The assessee is in the business of consultancy services. The return for the year under consideration was taken up for scrutiny assessment. During the course of the scrutiny assessment proceedings, the assessee was asked to furnish a detailed note on the nature of business activity, details of income. The assessee explained that the main business of the company was investment activity from which the assessee had interest income from loans and fixed deposits. It was further explained that during the year under consideration, the assessee has earned the interest income which was treated as business receipts from which administrative expenses and financial charges have been deducted. The net business income has been shown at Rs. 5,95,140/-. The AO did not accept this submission of the assessee. The AO was of the opinion that the assessee has not brought any evidence on record to establish that the investment activity of the assessee includes money lending and that the interest income has been generated in pursuance of its business activities. The AO concluded by taking interest income as income from other sources and denied the claim of administrative expenses and financial charges.
4. Aggrieved, the assessee carried the matter before the Ld. CIT(A) but without any success.
5. The Ld. Counsel for the assessee reiterated what has been submitted before the AO.
6. The Ld. Departmental Representative supported the findings of the Revenue authorities.
3 ITA. No. 6593/M/2013 7. We have carefully perused the orders of the authorities below and with the assistance of the Ld. Counsel we have also gone through the relevant documentary evidences brought on record. The assessment order pertaining to A.Y. 2001-02 exhibited at page-27 of the Paper book is worth mentioning. In the said assessment, the assessee's business has been accepted as that of finance. In that year also, the only source of income was interest, which has been accepted and taxed under the head 'business income. Once the Revenue has accepted the business activity of the assessee, then for the same source of income in subsequent years, the revenue authorities cannot take a different stand. This is against the rule of consistency as held by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs CIT 193 ITR 321.
7.1. Drawing support from the finding of the AO for A.Y. 2001-02, we set aside the order of the Ld. CIT(A) and direct the AO to treat the interest income under the head 'business income' and consider the administrative expenses and financial expenses as allowable expenditure u/s. 37(1) of the Act.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court at the time of hearing on 24th June, 2015
Sd/- Sd/-
(I.P. BANSAL ) (N.K. BILLAIYA) या यक सद य/JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मंब ु ई Mumbai; दनांक Dated : 24 June , 2015 th
व. न.स./ RJ , Sr. PS 4 ITA. No. 6593/M/2013
आदे श क त ल प अ े षत/Copy of the Order forwarde d to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)-
4. आयकर आयु त / CIT
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, स या पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई / ITAT, Mumbai
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