Case Law Details
Manjit Singh Malhi Vs ACIT (ITAT Kolkata)
The issue under consideration is whether CIT(A) is correct in treating the interest from Fixed deposits made in connection with Contract business as income from ‘Other sources’ in place of income from ‘Business’?
ITAT states that the FDR was used as security for obtaining the contract and was essential condition for bagging the contract, however, the assessee has not bothered to give any material/evidence to show that the interest accrued on the FDRs/deposit was incidental and that the main purpose of FDR’s was it was a condition for getting the contract or to avail the bank guarantee/security deposit/ E-money/tender money etc. It is noted that the assessee only made these contentions, but failed to produce any material to substantiate his contention that the interest accrued from FDR should be treated as income from business. Moreover, it is noted that there is shortfall because even if the contention of assessee is correct, then he should have shown the contract/business income, thus there is a clear shortfall. Therefore, in the light of aforesaid discussion, ITAT set aside the impugned order of the ld. CIT(A) and remand the matter back to the AO with a direction to examine the matter afresh regarding the characterization/nature of receipt in the light of the above mentioned case laws as well as the facts which the assessee bring to the notice of the AO. And if the assessee brings the notice of AO the terms of contract etc and is able to show that the FDR’s in question was essential/necessary for obtaining the contract, then the interest income from these FDRs to be treated as business income and if the assessee fails to do so, then AO is at liberty to treat it as income from Other Sources and assessment may be framed in accordance to law. With the above observation, the appeal of the assessee is allowed for statistical purpose.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal preferred by the assessee against the order of Ld. CIT(A), Asansol dated 10-05-2019 for the assessment year 2015-16.
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