Case Law Details
Euro Homes Vs DCIT (ITAT Chennai)
In so far as interest on deposits is concerned, the assessee has included interest received from deposits amounting to Rs. 55,449/- as business receipts and estimated net profit u/s. 44AD of the Act. The AO has excluded interest receipts from gross receipts and assessed under the head income from other source. It was the argument of the Ld. Counsel for the assessee, that the assessee has parked surplus funds which is not immediately required for the purpose of business in fixed deposits and earned interest and thus, it partakes the nature of business receipts and assessable under the head income from business. We find that there is no merits in the argument of the ld. Counsel for the assessee, that source of fund is not relevant to decide the nature and head of income under which a particular receipt is taxable, but what is relevant is nature of receipts. In this case, interest on fixed deposits is in the nature of income which is assessable under the head income from other source and this legal position is supported by the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemical and Fertilizers Ltd vs CIT[1997] 227 ITR 172(SC). Therefore, we are of the considered view that interest on fixed deposits is rightly assessed under the head income from other source and thus, we reject the argument of the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 13.10.2021 and pertains to assessment year 2017-18.
2. The brief facts of the case are that, the appellant is a partnership firm engaged in the business of home furnishing, filed its return of income for the assessment year 2017-18 on 31.03.2018, declaring total income u/s. 44AD of the Income‑ tax Act, 1961 (hereinafter referred to as “the Act”) and estimated net profit of Rs. 7,85,880/-. The gross turnover of the assessee for the assessment year 20 17-18 includes sale of goods, incentive received, interest on deposits etc. The AO, CPC processed return of income filed by the assessee and issued intimation u/s. 143(1) of the Act on 18.01.2019 and determined total income of Rs. 12,55,770/-, by making additions towards income from house property and income from other sources. The assessee carried the matter in appeal before the first appellant authority and ld. CIT(A), NFAC, Delhi vide their order dated 13.10.2021, dismissed appeal filed by the assessee. The assessee carried the matter in further appeal before the Tribunal and the ITAT, Chennai Benches in ITA No. 668/Chny/2022, dated 19.09.2022, partly allowed appeal filed by the assessee with a direction to the AO to reduce additions made towards income from house property and income from other sources to be reduced from gross turnover for the purpose of estimation of net profit. The assessee has filed Miscellaneous Application u/s. 254(2) of the Act, against order of the Tribunal and the ITAT vide their order dated 17.02.2023 in MA No. 06/Chny/2023, recalled the order of the Tribunal dated 19.09.2022, qua ground no. 2(b), 2(c) and 2(d) of appeal filed by the assessee. Therefore, we deem it appropriate to reproduce ground no. 2(b), 2(c) and 2(d) of grounds of appeal filed by the assessee:
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