Whether interest income earned on amount in Escrow Account can be treated as Income from other sources instead of income from business.
Section 41 (1) of the act provides treating of trading liability on cessation as deemed profit in business or profession. But section has to apply when there is benefit upon such cessation in form of any remission.
Issuing notice is a statutory requirement of initiating of penalty as to intimate the assessee about such initiation and to give him an opportunity of being heard. Under the act power are conferred on income-tax authorities to initiate any proceeding and to initiate notice.
The contention of the assessee was that the AO framed the assessment arbitrarily on the basis of assessment order for the assessment year 2002-03 which was set aside by the ITAT in ITA No. 326/Del./2007 vide order dated 25.7.2008.
After hearing the rival contentions, ITAT held that that the disallowance made by the assessee, is in excess to the disallowance with the working under 14 A r.w.s.8 D which amounts to Rs 1,32,913. ITAT upheld the contentions of the assessee and deleted the addition.
The learned counsel for the assessee contended that the assesseee was given sufficient opportunity to put forward his arguments with necessaryevidences by appearing in person or by an authorized representative.
Assessing Officer passed an order disallowing the deduction u/s 80IC and also rejected the assessee’s business loss set off against business income by concluding that the income credited to job work was an unexplained cash credit against which claim of set off not available.
From the bare reading of provision of section 2 (22) (e) it can be easily understood that section can be invoked only if assessee to whom any payment was made by way of loan or advance must be beneficial owner of the shares.
Assessee is a company engaged in the business of manufacturing and sale of cycle chains, wheel and axles. Assessee its return of income for AY 1997-98 was filed disclosing loss of Rs. 27,09,520/- and income of Rs. 1,08,544/- under the provisions of Section 115J.
The contention of the assessee was that the tax effect in this appeal is less than Rs.4,00,000/-, therefore, the department ought not to have filed this appeal in view of the circular issued by the CBDT and the provisions contained in Section 268A of the Income Tax Act, 1961
