Uttar Gujarat Vij Company Ltd. Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that interest on loans and advance to small advances on debit/ credit balances of suppliers and contractors are incidental to business hence taxable as business income and not as income from other sources.
Facts- Treatment of interest income on the debit/ credit balances of suppliers/customers is contested by the assessee. It is submitted that since the issue has been decided in favour of the assessee by ITAT in assessee’s own case for A.Y. 2014-2015. The matter may accordingly be decided in the light of and on the lines of the same.
Further, treatment of interest income on advance to staff as ‘other sources’ instead of ‘business income’ is also contested by the assessee.
Conclusion- Held that interest on other loans and advances which are related to small advances on the debit / credit balances of suppliers and contractors, the same is incidental to the business of the assessee and cannot be treated as income from other sources but is business income.
In case of treatment of interest income on advance to staff the matter is being restored to the file of assessing officer to consider the issue afresh upon examining the heads of income, after considering the facts of the assessee’s case.
