Income tax Officer, V. M/s. Nagpal Landmarks, Pune

ITA 103/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6745 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 143(3); 80IB; 37(1); 195; 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE ANIL CHATURVEDI AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.103/PUN/2017 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD-7(1), PUNE. ....... / APPELLANT / V/S. M/S. NAGPAL LANDMARKS. FLAT NO.31, 104 PARMAR CHAMBERS, SADHU VASWANI CHOWK, PUNE-411 001 PAN : AAFFN1476N / RESPONDENT ASSESSEE BY : SHRI P.D. KUDVA REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 08.01.2019 / DATE OF PRONOUNCEMENT : 21.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS), PUNE-5, PUNE DATED 30.09.2016 FOR THE ASSESSM ENT YEAR 2010-11 AS PER FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN HOLDING THAT INTEREST DERIVED BY TH E ASSESSEE ON SURPLUS ADVANCED TO THE PARTIES HAS TO BE ASSESSED AS BUSIN ESS INCOME AND NOT AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS HAD BEEN TAKEN IN THE ASSESSMENT. 2 ITA NO. 103/PUN/2017 A.Y.2010-11 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE INTERE ST EXPENSES AGAINST WHICH THE INTEREST INCOME ADJUSTED WERE IN THE NATURE OF EXPENSES WHICH WAS PAID ON THE FUNDS RAISED FOR BUSINESS PURPOSES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM AND FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING INCOME AT RS. NIL. TH E CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES DULY ISSUED AND SERVED ON THE ASSESSEE. THE ASSESSEE IS IN THE BUSINESS OF DEVELOPER A ND BUILDERS. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD GIVEN DETA ILS OF OTHER INCOME OF RS.78,48,881/- WHICH INCLUDED INTEREST RECEIVED OF RS.77,12,931 /-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS BORROWINGS FUNDS FRO M BANKS THE FUNDS OF WHICH WERE ADVANCED TO RELATED PARTIES FROM WHOM INTEREST HAD BEEN RECEIVED. THIS, THE ASSESSING OFFICER HELD TO BE CHARGEABLE U NDER INCOME FROM OTHER SOURCES. IT IS THIS ADDITION TO THE TOTAL INCOME THA T THE ASSESSEE HAS CHALLENGED. 3. BEFORE THE LD. CIT(APPEALS), THE ASSESSEE HAD FILED DETAILE D WRITTEN SUBMISSIONS ON THIS ISSUE WHICH IS AS UNDER: 1.0 GROUND OF APPEAL NO.1 THE AO ERRED IN SEPARATELY CHARGING INTEREST INCOME OF RS.77,12,931 UNDER THE HEAD 'INCOME FROM OTHER SOURCES. THE APPELLANT PLEADS THAT ITS INCOME WAS CORRECTLY COMPUTED AND DECLARED UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND THAT THE AO'S ACTION IS NOT JUSTIFIED. 1.1 THE ASSESSEE IS ENGAGED IN PROPERTY DEVELOPMENT AT TWO SITES VIZ. MEADOWS HABITAT, PASHAN AND DEV EXOTICA, KHARADI WH ICH FALL WITHIN THE SCOPE OF SEC.80IB(10) OF THE INCOME TAX ACT, 1961. THE MEADOWS HABITAT PROJECT WORK WAS IN PROGRESS DURING THE YEAR. THE D EV EXOTICA PROJECT WAS COMPLETED ON 06.03.2010. THE ASSESSEE FILED RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.NIL AFTER C LAIMING DEDUCTION U/S 80IB(10) OF ITS INCOME FROM BUSINESS OF RS. 2,88,98 ,546 FROM DEV EXOTICA PROJECT. 1.2 THE ASSESSEE'S PROFIT & LOSS ACCOUNT INCLUDED INTEREST EXPENSES OF RS.117,43,813 (ON BORROWINGS OF RS.7.52 CRORES FROM THREE BANKS, USED FOR PURPOSES OF BUSINESS) AND INTEREST INCOME OF RS.77, 12,931 (ON ADVANCES OF RS.6.14 CRORES TO TWO RELATED PARTIES). 3 ITA NO. 103/PUN/2017 A.Y.2010-11 1.3 1N THE COMPUTATION OF INCOME ENCLOSED WITH THE RETURN, THE ASSESSEE DISALLOWED OUT OF ITS CLAIM FOR INTEREST EXPENSES A SUM OF RS.26,94,845 ON ACCOUNT OF DIVERSION OF BORROWED FUNDS TO ITS RELAT ED PARTIES. 1.4 THE ASSESSEE IN ASSESSMENT PROCEEDINGS EXPLAINE D THAT IT HAD INCURRED NET INTEREST EXPENSE OF RS.40,30,882 (I.E. INTEREST EXPENSES RS.1,17,43,813 LESS INTEREST INCOME OF RS.77,12,931 ) FOR ITS BUSINESS, AND AFTER ADJUSTING THE AMOUNT OF RS.26,94,845 IN THE I T RETURN, THE ASSESSEE HAD CLAIMED NET INTEREST EXPENSES OF RS.13,36,037 ( I.E. RS.40,38,881 LESS RS. 26,94,845) IN COMPUTING PROFITS AND GAINS OF BU SINESS(PGBP IN BRIEF). 1.5 THE AO COMPLETED ASSESSMENT U/S. 143(3) VIDE OR DER DT. 30.03.2013 DETERMINING TOTAL INCOME AT RS. 77,12,931/- BY CHAR GING INTEREST INCOME SEPARATELY UNDER THE HEAD 'INCOME FROM OTHER SOURCE S' (IFOS IN BRIEF). 1.6 IN RESPONSE TO SHOW-CAUSE NOTICE THE ASSESSEE O UTLINED THE ABOVE FACTS AND OBJECTED TO THE AO'S PROPOSAL TO CHARGE INTERES T INCOME OF RS. 77,12,931 SEPARATELY AS 'INCOME FROM OTHER SOURCES' . 1.7 THE AO IN PARA 4 OF THE ASSESSMENT ORDER HAS AC CEPTED THAT BORROWED FUNDS HAVE BEEN USED IN BUSINESS AND THAT THE CLAIM OF INTEREST IS ADMISSIBLE AS A DEDUCTION AS BUSINESS EXPENDITURE. THE AO HOWEVER HAS HELD THAT INTEREST INCOME OF RS.77,12,931 IS CHARGE ABLE UNDER THE HEAD IFOS RELYING ON THE DECISION OF TUTICORIN ALKALI CH EMICALS AND FERTILIZERS LTD VS. CIT(1997) 227 ITR 172(SC). 1.8 WE SUBMIT THAT THE FACTS OF TUTICORIN (SUPRA) A RE DIFFERENT. IN THE SAID CASE THE ASSESSEE HAD NOT COMMENCED BUSINESS. DURIN G CONSTRUCTION AND ESTABLISHMENT OF ITS FACTORY, THE COMPANY INVESTED IN SHORT TERM DEPOSITS FUNDS BORROWED FOR SETTING UP ITS FACTORY. THE ASSE SSEE CLAIMED THAT INTEREST INCOME WAS TO BE NETTED OFF AGAINST PRE PR ODUCTION EXPENDITURE WHICH WAS CAPITALIZED. NO CLAIM WAS MADE U/S 57(III ). THE COURT HELD THAT INTEREST EARNED ON INVESTMENT OF A PORTION OF TERM LOANS WHICH WERE LYING IDLE FOR A CERTAIN INTERIM PERIOD PRIOR TO COMMENCE MENT OF BUSINESS WOULD NOT GO TO REDUCE THE PRE- PRODUCTION EXPENSES BUT W AS TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 1.9 IN THE PRESENT CASE THE ASSESSEE HAD COMMENCED BUSINESS AND USED BORROWED FUNDS FOR ITS REVENUE EARNING ACTIVITIES A ND INCURRED INTEREST EXPENSES. TO THE EXTENT FUNDS WERE DIVERTED TO RELA TED PARTIES, INTEREST WAS RECOVERED, THEREBY MAXIMIZING PGBP AND CLAIMING I NTEREST ON BORROWINGS TO THE EXTENT INCURRED WHOLLY AND EXCLUS IVELY FOR BUSINESS PURPOSE. 1.10 SECTION 56 OF THE IT ACT, 1961 READS AS FOLLOW S: 56(1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INC OME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IF IT IS NOT CHARGEABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITEM A TO E. 1.11 WE SUBMIT THAT THE LANGUAGE OF SEC.56 IS UNAMB IGUOUS AND CLEAR. I) IT IS WELL SETTLED THAT INTEREST CAN BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' ONLY IF IT CANNOT BE BROUGHT WI THIN ONE OR THE OTHER OF THE SPECIFIC HEAD OF CHARGE.(CIT VS .GOVINDA CHOUDH URY & SONS 1993 203 ITR 881(SC)). II) WHERE AN INCOME CAN APPROPRIATELY FALL UNDER SE CTION 28 AS BUSINESS INCOME, OR ANY OTHER SPECIFIC HEAD OF INCOME, NO RE SORT CAN BE MADE TO SECTION 56.[S.G. MERCANTILE CORPORATION P. LTD. V C IT(1972) 83 ITR 700 4 ITA NO. 103/PUN/2017 A.Y.2010-11 (SC)]. 1.12 IN LIGHT OF THE ABOVE SUBMISSIONS WE PLEAD THA T INCOME IS CORRECTLY DECLARED UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND THAT INTEREST INCOME OF RS.77,12,931 IS NOT SEPARATELY CHARGEABLE AS IFOS.' 2.0 GROUND OF APPEAL NO. 2 THE AO ERRED IN NOT ALLOWING CORRESPONDING INTEREST EXPENSES OF RS.77,12,931 INCURRED AGAINST INTEREST INCOME IN CO MPUTATION OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE APPEL LANT PLEADS FOR DIRECTIONS ALLOWING THE CORRESPONDING INTEREST EXPE NSES AS PER SECTION 57(III) OF THE IT ACT, 1961. 2.1 THIS IS AN ALTERNATIVE GROUND TO BE DECIDED ON LY IF GROUND OF APPEAL NO. 1 IS DECIDED AGAINST THE APPELLANT. 2.2. IN PARA 5 OF THE ASSESSMENT ORDER THE AO HAS HELD THAT 'THE CLAIM OF DEDUCTION FOR INTEREST PAID AND INTEREST RECEIVED I S NOT TENABLE IN VIEW OF PROVISIONS OF SECTION 57(III) OF THE LT. ACT. THE L EGISLATURE HAS DELIBERATELY USED WORDS OF NARROWER IMPORT IN GRANTING DEDUCTION UNDER THE 'SAID PROVISION LIKE 'LAID OUT OR EXPENDED FOR THE PURPOS E OF MAKING OR EARNING SUCH INCOME'. THE AO HAS SUPPORTED HIS CONCLUSION B Y RELYING ON : I) CIT VS. AMALGAMATION LTD. 214 ITR 399 ( MAD.) II) CONSOLIDATED FIBRES AND CHEMICALS LTD. VS. CIT 195 CTR 605. III) CIT VS. RAJENDRA PRASAD MOODY 115 ITR 519 ( SC ) 2.3 FROM THE ASSESSEE'S AUDITED ACCOUNTS IT IS EVID ENT THAT THE ASSESSEE HAD MADE ADVANCES TO RELATED PARTIES BY DIVERTING F UNDS BORROWED FROM BANKS. THE ASSESSEE RECOVERED INTEREST THEREON, CON SEQUENTLY MAINTAINING, IF NOT MAXIMIZING, THE PROFITS & GAINS OF ITS BUSINESS. 2.4 IN RESPONSE TO THE SHOW CAUSE, THE ASSESSEE MAD E AN ALTERNATIVE CLAIM THAT IF THE AO WAS CHARGING INTEREST INCOME OF RS.7 7,12,931 SEPARATELY UNDER THE HEAD IFOS, THEN THE CORRESPONDING INTERES T EXPENSE ON BORROWING RS.77,12,931 LOGICALLY OUGHT TO BE CONSIDERED AND N ETTED OFF IN COMPUTING INCOME. 2.5 THE RELEVANT PORTION OF SECTION 57 OF THE IT AC T 1961 READS AS UNDER: 57. THE INCOME CHARGEABLE UNDER THE HEAD INCOME FR OM OTHER SOURCES SHALL BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCT IONS NAMELY:- (I)..( NOT RELEVANT). (II) (NOT RELEVANT).. (III) ANY OTHER EXPENDITURE ( NOT BEING IN THE NATU RE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. THE AO ADVERTS TO THE NARROWER IMPORT OF THE WORDS OF THE SECTION TO REACH HIS CONCLUSION WITHOUT APPRECIATING THAT THE ASSESS EE HAD DIVERTED BORROWED FUNDS IN RESPECT OF WHICH INTEREST EXPENSE INCURRED FALLS CLEARLY WITHIN THE LANGUAGE OF SECTION 57(III). 2.6 AS REGARDS THE CITED CASE LAW:- (I) IN THE CASE OF AMALGAMATION LTD(SUPRA) THE QUES TION BEFORE THE COURT WAS WHETHER INTEREST PAID BY THE ASSESSEE COMPANY O N BORROWINGS FOR 5 ITA NO. 103/PUN/2017 A.Y.2010-11 PURPOSE OF PAYING ESTATE DUTY WAS ADMISSIBLE BUSINE SS EXPENDITURE THE SC HELD THAT THE ASSESSEE WAS CARRYING ON BUSINESS AND ITS INCOME WAS TO BE COMPUTED UNDER THE HEAD PROFITS & GAINS OF BUSIN ESS OR PROFESSION. THE SC APPROVED THE DECISION OF GUJARAT HIGH COURT IN T HE CASE OF CIT VS INDUMATI RATANLAL (1968 70 ITR 353 (GUJ)) WHICH HEL D: THE QUESTION THEN ARISES: DOES IT MAKE ANY DIFFEREN CE IF THERE WAS A CHARGE ON THE SHARES FOR PAYMENT OF ESTATE DUTY AND MONEYS WERE BORROWED BY THE ASSESSEE FOR THE PURPOSE OF CLEARING THE CHARGE ? WE CANNOT ASSENT TO THE BROAD PROPOSITION CANVASSED ON BEHALF OF THE AS SESSEE THAT WHENEVER LIABILITY IS CHARGED ON A PROPERTY, AND MONEYS ARE BORROWED FOR CLEARING THE CHARGE, INTEREST PAID ON THE BORROWED MONEYS WOULD NECESSARILY BE AN ALLOWABLE EXPENDITURE IN COMPUTING THE ASSESSABLE I NCOME FROM THE PROPERTY. WHETHER IT CONSTITUTES AN ALLOWABLE EXPEN DITURE OR NOT WOULD DEPEND ON THE FACTS OF EACH CASE. BUT ONE THING IS CLEAR THAT IF PROPERTY IS RECEIVED BY AN ASSESSEE SUBJECT TO A CHARGE FOR PAY MENT OF A LIABILITY AND MONEYS ARE BORROWED FOR CLEARING THE CHARGE BY DISC HARGING THE LIABILITY, INTEREST PAID ON THE BORROWED MONEYS WOULD BE AN AL LOWABLE EXPENDITURE. IF THEREFORE, AT THE DATE WHEN THE ESTATE DUTY WAS PAID BY THE ASSESSEE, THE SHARES WERE CHARGED WITH PAYMENT OF LIABILITY F OR ESTATE DUTY, WE MUST HOLD THAT INTEREST PAID ON THE BORROWED MONEYS WOUL D BE AN ADMISSIBLE EXPENDITURE UNDER SECTION 57(III). THE SUPREME COURT IN AMALGAMATED'S CASE FURTHER OBS ERVED: 'THERE IS IN FACT NOTHING IN THE LANGUAGE OF SECTIO N 57(III) TO SUGGEST THAT THE PURPOSE FOR WHICH THE EXPENDITURE IS MADE SHOULD FR UCTIFY INTO ANY BENEFIT BY WAY OF RETURN IN THE SHAPE OF INCOME. THE PLAIN NATURAL CONSTRUCTION OF THE LANGUAGE OF SECTION 57(III) IRRESISTIBLY LEADS TO THE CONCLUSION THAT TO BRING A CASE WITHIN THE SECTION, IT IS NOT NECESSAR Y THAT ANY INCOME SHOULD IN FACT HAVE BEEN EARNED AS A RESULT OF THE EXPENDI TURE .. '(P.522) SINCE WE HAVE NOTICED THAT THE LANGUAGE OF SECTION 37(1) IS WIDER THAN THAT OF SECTION 57(III) OF THE INCOME TAX ACT, IT IS APT IN SUCH A SITUATION TO HOLD THAT INTEREST PAID ON ANY BORROWING FOR THE PURPOSE OF DISCHARGING THE ESTATE DUTY LIABILITY WILL BE EXPENDITURE LAID OUT OR EXPENDED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE-COMPANY. (II) IN THE CASE OF CONSOLIDATED FIBRES(SUPRA)THE I SSUE BEFORE THE COURT WAS WHETHER INTEREST EXPENDITURE INCURRED BY THE APPELL ANT WAS ALLOWABLE UNDER SECTION 57 OF THE I.T. ACT, 1961 WHILE COMPUT ING INTEREST INCOME SOUGHT TO BE ASSESSED AS INCOME FROM OTHER SOURCES UNDER SEC.56, AS EXPENDITURE INCURRED FOR EARNING THE INCOME? THE COURT IN PARA 15 OF THE ORDER HELD THAT THE QUE STION IS DEPENDANT ON THE FACT WHETHER THE ASSESSEE HAD COMMENTED ITS BUS INESS. SO LONG THE BUSINESS IS NOT COMMENCED, THE INTEREST PAID CANNOT BE TREATED AS REVENUE EXPENDITURE, BUT (WAS) TO BE INCLUDED IN THE ACTUAL COST FOR BEING CAPITALIZED AS CAPITAL EXPENDITURE, AND, THEREFORE, IT COULD NO T HAVE BEEN TREATED TO BE AN EXPENDITURE INCURRED WITHIN THE MEANING OF SEC.5 7(III). (III) IN THE CASE OF MOODY (SUPRA) DEALING WITH THE LANGUAGE OF SECTION 57(III) THE SUPREME COURT OBSERVED: 'IT IS TRUE THAT THE LANGUAGE OF SECTION 37(1) IS A LITTLE WIDER THAN THAT OF SECTION 57(III), BUT WE DO NOT SEE HOW THAT CAN MA KE ANY DIFFERENCE IN THE TRUE INTERPRETATION OF SECTION 57(III). THE LANGUAG E OF SECTION 57(III) IS CLEAR AND UNAMBIGIOUS AND IT HAS TO BE CONSTRUED ACCORDIN G TO ITS PLAIN NATURAL 6 ITA NO. 103/PUN/2017 A.Y.2010-11 MEANING AND MERELY BECAUSE A SLIGHTLY WIDER PHRASEO LOGY IS EMPLOYED IN ANOTHER SECTION WHICH MAY TAKE IN SOMETHING MORE, I T DOES NOT MEAN THAT SECTION 57(III) SHOULD BE GIVEN A NARROW AND CONSTR ICTED MEANING NOT WARRANTED BY THE LANGUAGE OF THE SECTION AND, IN FA CT, CONTRARY TO SUCH LANGUAGE. 2.7 WE SUBMIT THAT THE ABOVE COURT ORDERS HOLD THAT DEPENDING ON THE FACTS OF THE CASE INTEREST PAID ON BORROWED MONEYS IS AN ALLOWABLE EXPENDITURE AGAINST INCOME FROM BUSINESS OR UNDER SECTION 57(II I) NOTWITHSTANDING THE NARROWER AND CONSTRICTED MEANING OF THE LANGUAGE OF SECTION 57(III). WHERE THE ASSESSEE HAS NOT COMMENCED BUSINESS THE INTERES T PAID CANNOT BE TREATED AS EXPENDITURE INCURRED WITHIN SECTION 57(I II). THE AO IN THE ASST. ORDER HAS ERRED IN RELYING ON T HE SAID CASES TO HOLD THAT INTEREST ON BORROWINGS IS NOT ALLOWABLE AS A DEDUCT ION UNDER SECTION 57(III). 2.8. IN THE LIGHT OF THE ABOVE SUBMISSIONS, WE SUBM IT THAT THE AO IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST PAID U/S. 57(III) IS NOT TENABLE. 4. THE LD. CIT(A) AFTER CONSIDERING THE ASSESSMENT ORDER , FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE HELD AS FOLLOWS: 5.4 I HAVE CONSIDERED THE MATERIAL ON RECORD AND SUBMIS SIONS OF THE APPELLANT CAREFULLY. I TEND TO AGREE WITH THE APPEL LANT CONTENTIONS. THE APPELLANT IN ITS WRITTEN SUBMISSION HAS STATED THAT, THE NET EXPENSE S OF RS.13,36,037/- ON THE INTEREST PAID AND INTEREST RE CEIVED HAS BEEN CLAIMED AS INTEREST EXPENSES IN COMPUTING PROFITS A ND GAINS OF BUSINESS AND PROFESSION. THE AO HAS NOT CONTROVERTED THE FIG URES OF THE INTEREST EXPENSES IN THE ASSESSMENT ORDER. THE AO HAS ONLY G ENERALLY EXPRESSED THAT, THE TOTAL INTEREST EXPENSES WAS ADMISSIBLE AS A DEDUCTION AGAINST THE BUSINESS INCOME WHICH HAD BEEN CLAIMED AS EXEMP T INCOME BY TAKING RECOURSE TO SECTION 80IB (10). IT IS ALSO NOT THE C ASE OF THE AO, THAT THE FUNDS WERE NOT USED FOR BUSINESS AS IN THE ASSESSME NT ORDER PARA 4 IT IS EXPLICITLY STATED THAT, THE FUNDS WERE USED FOR BUS INESS. THE INTEREST RECEIVED CANNOT FALL UNDER THE HEAD INCOME FROM OTH ER SOURCES. THEREFORE, THE ACTION OF THE AO IS NOT SUSTAINED. THE AO IS DI RECTED TO DELETE THE ADDITION MADE UNDER THE HEAD INCOME FROM OTHER SOUR CES AND ACCEPT THE COMPUTATION WHICH SHOWED THE INTEREST INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS & PROFESSION. THE APPELLANT SUCCEEDS IN GROUND NO.1. AS GROUND NO.1 IS DECIDED IN FAVOUR OF THE APPELLAN T, THE ALTERNATE PLEA RAISED IN THE FORM OF GROUND NO.2 IS THEREFORE INFRUCTUOUS AND HENCE DISMISSED. 5. WE HAVE PERUSED THE CASE RECORD AND HEARD RIVAL CO NTENTIONS. ON PERUSAL OF THE ORDER PASSED BY THE LD. CIT(APPEALS), WE FIND THAT IT IS OBSERVED THEREIN THAT THE ASSESSING OFFICER HAS NOT CONTROVERTED THE FIGURES OF THE INTEREST EXPENSES IN THE ASSESSMENT ORDER. THE ASSESSIN G OFFICER HAS ONLY GENERALLY EXPRESSED THAT THE TOTAL INTEREST EXPENSES WAS ADMISSIBLE AS A 7 ITA NO. 103/PUN/2017 A.Y.2010-11 DEDUCTION AGAINST THE BUSINESS INCOME WHICH HAS BEEN CL AIMED AS EXEMPT INCOME BY TAKING RECOURSE TO SECTION 80IB (10) OF THE ACT . IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT THE FUNDS WERE NOT USED FOR BUSINESS AS IN THE ASSESSMENT ORDER PARA 4, IT IS EXPLICITLY STATED THAT THE FUNDS WERE USED FOR BUSINESS AND THEREFORE, THE INTEREST RECEIVED CANNOT FALL UNDER THE HEAD INCOME FROM OTHER SOURCES. ON THIS PREMISE, THE LD. CIT(A) HAS PR OVIDED RELIEF TO THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(APPEALS) WHICH IS THEREBY UPHELD. HENCE, GROUNDS RAISED BY THE REVENUE ARE DIS MISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 21 ST DAY OF JANUARY, 2019. SD/ SD/- ANIL CHATURVEDI PARTHA SAR ATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 21 ST JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), PUNE-5, PUNE. 4. THE PR. CIT, PUNE-4, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 8 ITA NO. 103/PUN/2017 A.Y.2010-11 DATE 1 DRAFT DICTATED ON 08 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER