Case Law Details
Assessing Officer noticed that the assessee claimed set off of brought forward business loss against income of Rs. 24,94,407/- for the year under consideration. On perusal of profit and loss account , it was revealed that the assessee earned interest income amounting to Rs. 91,26,226/- from the deposits in the banks and thus, wrongly claimed set off of brought forward business loss against such interest income .
To a query by the AO, seeking to assess interest income from deposits in the banks under the head ’Income from Other Sources’, the assessee replied that the company was registered as a non banking financing institution and engaged mainly in the business of advancing the loans. Since their main business is the earning of interest income and during the year, the assessee could not find suitable borrowers to whom the loans could be given, surplus funds lying idle were utilized in earning interest income from deposits in the banks. Accordingly, the assessee claimed that interest income was business income and, therefore, set off of brought forward business losses against the said income, could not be denied. However, the AO did not accept the submissions of the assessee on the ground that not even a single rupee was earned by way of interest on loans and advances while the entire interest income was earned from bank deposits.
INCOME TAX APPELLATE TRIBUNAL DELHI
ITA no.5464/Del/2011 – Assessment year: 2008-09
ACIT V/s. Vashulinga Finance Pvt . Ltd.
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