M/s Kunal Exim, Kolkata V. ITO, Wd-31(1), Kolkata, Kolkata

ITA 1859/KOL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0848 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 23-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP LAKRA
• Assessee Lawyers: S M SURANA
• Keywords: Business income
• Section: 143(3); 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI A.T. VARKEY, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 1859/KOL/20 16 ASSESSMENT YEAR : 2013-1 4 M/S KUNAL EXIM -VS- ITO, WARD-31(1), KOLKATA [PAN: AAEFK 0181 G] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S. M . SURANA, ADVOCATE FOR THE RESPONDENT : SHRI SANDEEP LAKRA, ADDL. CIT SR. DR DATE OF HEARING : 25.09.2018 DATE OF PRONOUNCEMENT : 05.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-9, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO. 27/ CIT(A)-9, WD-31(1)/2016-17/KOL DATED 11.08.2016 AGAINST THE O RDER PASSED BY THE ITO, WARD- 31(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.03.2016 FOR TH E ASSESSMENT YEAR 2013-14. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE TOWARDS LIABILITIES STANDING IN THE NAME OF M.TEWARI, S.TEWARI, MD. ISLAM AND INSPECTION CHARGES TREATING THE LIABILITIES AS BOGUS , IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 2 2.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CUSTOMS CLEARING AND FORWARDING AGENCY. THE RETURN OF INCOME FOR THE ASST YEAR 2013-14 WAS FILED ELECTRONICALLY BY THE ASSESS EE FIRM ON 15.3.2014 DECLARING TOTAL INCOME OF RS 7,84,972/-. THE GROSS BILLING DONE BY THE ASSESSEE WAS RS 9,68,76,354/- WHICH INCLUDES BILL GENERATED TO PARTIES FOR JOB EX PENSES OF RS 9,49,61,231/- AND SERVICE CHARGES WITHOUT SERVICE TAX OF RS 17,04,860/- AND S ERVICE TAX REIMBURSEMENT OF RS 2,10,263/- . THE ASSESSEE HAS SHOWN RS 17,04,860/- ( 9,68,76,354 9,49,61,231 2,10,263) IN ITS PROFIT AND LOSS ACCOUNT AS NET INC OME . THE ASSESSEE IN THIS REGARD EXPLAINED THAT THE TOTAL BILL RAISED BY THE ASSESSE E PREDOMINANTLY INCLUDES A PORTION TOWARDS REIMBURSEMENT OF EXPENSES LIKE CUSTOMS DUTY , CHARGES TO SHIPPING COMPANIES, TRANSPORTATION CHARGES ETC AND THAT ONLY THE SERVIC E CHARGES COMPONENT INCLUDED IN THE TOTAL BILL WOULD BE ITS INCOME. IN THE BALANCE SH EET, THE ASSESSEE HAD SHOWN LIABILITY FOR EXPENSES OF RS 4,16,53,151/- FOR WHICH DETAILS WERE SOUGHT BY THE LD AO. THE LD AO OBSERVED THAT THE ASSESSEE SUBMITTED EVIDENCE OF OU TSTANDING BALANCE OF RS 2,90,445/- ONLY WHICH WAS PAYABLE TO HDF AGAINST CAR LOAN. AP ART FROM THIS, IT SUBMITTED DETAILS OF JOB EXPENSES PAYABLE FOR THE PERIOD 2012-13 AMOU NTING TO RS 46,06,609/- AND JOB CHARGES PAYABLE FOR THE PERIOD 2011-12 AMOUNTING T O RS 45,79,443/-. HE OBSERVED THAT NO DETAILS WERE PROVIDED FOR THE REMAINING OUTSTAND ING LIABILITY OF RS 3,21,76,654/- SHOWN UNDER THE HEAD LIABILITY FOR EXPENSES. 2.2. THE LD AO OBSERVED THAT THE DETAILS OF LIABILI TY TOWARDS JOB EXPENSES AS ON 31.3.2013 SHOWN BY THE ASSESSEE IS AS UNDER:- OPENING BALANCE AS ON 1.4.2012 - RS 3,70,46,541.58 ADD: PAYABLE FOR THE YEAR - RS 46,06,609.62 CLOSING BALANCE AS ON 31.3.2013 - RS 4,16,53,151.2 0 THE BREAK UP OF JOB CHARGES PAYABLE FOR THE YEAR WE RE FURNISHED BY THE ASSESSEE AS UNDER:- 3 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 3 A) TRANSPORTATION CHARGES INCLUDING DETENTION CHARG ES - PASUPATI ROADWAYS CORPORATION 14,20,200/- B) MANOJ TIWARI (CONTAINER SURVEY & REPAIRING CHARG ES) 2,96,800/- C) SAROJ TIWARI (CARTOONS PLASTICS, TAPE, ETC) 3,21,610/- D) MD. ISRAIL (LABOUR CHARGES) 4,10,800/- E) MD. ISLAM (CRANE CHARGES) 4,05,000/- F) MD. ISMAIL (CONTAINER DESTUFFING / STUFFING CHAR GES) 5,94,000/- G) MD. ISMAIL (COOPERING & CEILING CHARGES) 2,9 3,700/- H) MD. ISRAIL (OVERTIME CHARGES FOR LABOUR) 1,6 2,000/- I) CUSTOM/ GOODS INSPECTION CHARGES 7,02,500/- TOTAL 46,06,610/- 2.3. THE LD AO SOUGHT TO VERIFY THE GENUINENESS OF THE AFORESAID CLAIMS OF CREDITORS FOR EXPENSES FOR WHICH NOTICES U/S 133(6) OF THE ACT WE RE ISSUED TO ALL THE AFORESAID PARTIES CALLING FOR CERTAIN PARTICULARS. OUT OF THE ABOVE, THE NOTICE SENT TO PASUPATI ROADWAYS CORPORATION RETURNED UNSERVED. THE LD AO OBSERVED THAT DESPITE NON-SERVICE OF NOTICE ON PASUPATI ROADWAYS CORPORATION, A REPLY WAS FILED BY THEM DIRECTLY TO THE OFFICE OF THE LD AO. THE LD AO ALSO OBSERVED THAT REPLIES FRO M OTHER SUNDRY CREDITORS EXCEPT MD. ISMAIL WAS RECEIVED BY HIM IN RESPONSE TO NOTICE U/ S 133(6) OF THE ACT. THE REPLIES GIVEN BY THOSE PARTIES WERE SUMMARIZED BY THE LD A O IN THE FOLLOWING TABLE :- 4 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 4 2.4. THE LD AO SOUGHT TO FURTHER VERIFY THE AFORESA ID DETAILS BY ISSUING SUMMONS U/S 131 OF THE ACT TO ALL THE PARTIES SEEKING THEIR PERSONA L APPEARANCE TOGETHER WITH THE REQUISITE DETAILS THAT WERE CALLED FOR. IN RESPONSE TO SUMMON S U/S 131 OF THE ACT, SRI MANOJ TIWARI AND SAROJ TIWARI APPEARED ON 22.2.2016. THE LD AO OBSERVED THAT THEY COULD NOT PRODUCE THE BOOKS OF ACCOUNTS AND DOCUMENTARY E VIDENCES. A STATEMENT WAS RECORDED FROM THEM ON OATH WHEREIN THEY DEPOSED THA T THEY ARE ENGAGED IN THE WORK RELATED TO TRANSPORTATION OF CONTAINERIZED GOODS FR OM KOLKATA PORT TO VARIOUS PARTS OF KOLKATA AND NEIGHBOURING STATES ; THAT THEY DO NOT HAVE ANY TRUCK OR LORRY OF THEIR OWN ; THAT THEY MANAGE WORK FROM HIRING TRUCKS AND LORRY FROM THE LOCAL TRUCK OWNERS AND PAY THEM THE RENT ; THAT THEY EARN MAINLY FROM THE COMM ISSION RECEIVED FROM THE TRANSPORTATION OF CONTAINERIZED GOODS FROM KOLKATA PORT ; THAT THEIR ANNUAL INCOME WAS ABOUT RS 2 LAKHS ; THAT THEY DO NOT MAINTAIN ANY BO OKS OF ACCOUNTS ; THAT THE ASSESSEE ( I.E. M/S KUNAL EXIM) WOULD APPROACH THEM FOR TRUCKS AS PER THEIR REQUIREMENT WHICH WOULD BE ARRANGED BY THEM FOR THE ASSESSEE ; THAT T HEY TAKE THE MONEY FROM THE ASSESSEE AS AND WHEN THEY GET THE ORDER FOR TRUCKS ; THAT TH E SAME MONEY IS ADVANCED TO THE TRUCK OWNERS ; THAT THEY DONT REMEMBER EXACTLY WHAT WAS THE OUTSTANDING AMOUNT LYING WITH THEM AS ON 31.3.2013 ; THAT THEY COULD NOT PRODUCE ANY EVIDENCE OF ANY OUTSTANDING AMOUNT LYING WITH THE ASSESSEE ; THAT THEY WERE WOR KING JOINTLY UNDER THE NAME OF PASUPATI ROADWAYS CORPORATION WHICH HAD TRANSACTION S WITH THE ASSESSEE AND THAT THEY DO NOT HAVE ANY OUTSTANDING BALANCE IN THEIR INDIVI DUAL CAPACITY WITH THE ASSESSEE AS ON 31.3.2013 . HAVING SAID THIS, THEY FURTHER DEPOSED THAT THEY MIGHT HAVE SOME SMALL AMOUNT OUTSTANDING DUE FROM THE ASSESSEE WHICH THEY DONT REMEMBER AND THEY DONT HAVE ANY PROOF FOR IT. THEY FURTHER DEPOSED BEFOR E THE LD AO REGARDING THE REPLY SENT BY PASUPATI ROADWAYS CORPORATION DIRECTLY THAT THEY DONT HAVE ANY IDEA ABOUT INCOME TAX AND HENCE ON RECEIPT OF THE SAID NOTICE , THEY HAD GIVEN IT TO TUSHAR PANDIT, THE PARTNER OF M/S KUNAL EXIM ( I.E THE ASSESSEE HEREIN ) WHO IN TURN HANDED OVER TO HIS ADVOCATE FOR PREPARATION OF THE REPLY AND THAT THEY HAD SIGNED ON THE DOTTED LINES IN GOOD FAITH. 5 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 5 2.5. IN RESPONSE TO THE SUMMONS U/S 131 OF THE ACT, MD. ISMAIL AND MD. ISRAIL APPEARED ON 3.3.2016 BEFORE THE LD AO , BUT MD. ISLAM DID NO T APPEAR. THEY WERE ASKED TO APPEAR WITH SUPPORTING DOCUMENTS AND BOOKS OF ACCOUNTS WHI CH WERE NOT PRODUCED EXCEPT THEIR IDENTITY PROOF AND DAILY DOCK PERMIT. THEIR STATEM ENT WAS RECORDED ON OATH BY THE LD AO. THE CONTENTS OF THEIR STATEMENT AS STATED IN THE ORDER OF LD AO ARE AS UNDER:- (A) MD. ISRAIL HIMSELF WORK AS A LABOUR AND SOMETIM ES ARRANGE LABOUR FOR THE ASSESSEE AND MD. ISMAIL DO WORK OF LOADING AND UNLOADING FRO M CONTAINER BY CRAINS MAINLY AT DOCKYARD AT KOLKATA. (B) THEIR DAILY INCOME IS RS.500/- AND ANNUAL INCOM E IS ABOUT RS.1,80,000/- ONLY. ( C) THEY DO NOT MAINTAIN ANY BOOKS OF ACCOUNTS. (D) M/S. KUNAL EXIM APPROACH THEM FOR LABOURS AND F OR LOADING & UNLOADING WORKS AS PER THEIR REQUIREMENT. THEY ARRANGE LABOURS AND CRA NES FOR THEM AND MAKE ADVANCE PAYMENT OF ABOUT 80%, REMAINING PAYMENT IS MADE FEW DAYS AFTER COMPLETION OF THE WORK. (E) NONE OF THEM REMEMBER EXACTLY WHAT WAS THE OUTS TANDING AMOUNT LYING WITH THEM AS ON 31.03.2013. THEY COULD NOT PRODUCE ANY EVIDENCE OF ANY OUTSTANDING AMOUNT LYING WITH THE ASSESSEE. (F) BOTH OF THEM REITERATED, 'WE WORK ON A VERY SMA LL SCALE AS A LABOUR. WE MIGHT HAD SOME SMALL AMOUNT OUTSTANDING WITH M/S. KUNAL EXIM. BUT / DON'T REMEMBER EXACTLY AND / DON'T HAVE ANY PROOF OF IT. BUT THE AMOUNT AS MENTIONED BY YOU WAS NEVER OUTSTANDING AND WE ARE A VERY SMALL PERSON, WE SOME HOW MANAGE OUR LIVELY HOOD.' (G) WHEN ASKED ABOUT THE REPLY SENT IN RESPONSE TO NOTICE U/S. 133(6) TO THEM, BOTH STATED, 'I DID NOT REPLY THE SAID LETTER. SINCE, / DO NOT HAVE THE IDEA ABOUT INCOME TAX. SO ON RECEIPT OF THE SAID NOTICE ISSUED TO ME, / GIVEN IT TO TUSHAR PANDIT, THE PARTNER OF M/S. KUNAL EXIM. HE HANDED OVER THE SAME TO HIS ADV OCATE AND HE HAS PREPARED THE SAME AND TOLD ME TO PUT MY SIGNATURE ON IT AND ON G OOD FAITH / SIGNED THE DOCUMENTS.' 2.6. THE LD AO TREATED THE NET TRANSACTIONS DURING THE YEAR IN RESPECT OF AFORESAID CREDITORS AMOUNTING TO RS 46,06,610/- AS BOGUS LIAB ILITIES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 2.7. THE LD CITA OBSERVED THAT SRI MANOJ TIWARI (R S 2,96,800/- ) ; SRI SAROJ TIWARI ( RS 3,21,610/-) DID NOT CONFIRM HAVING TRANSACTIONS IN THEIR INDIVIDUAL CAPACITY WITH THE 6 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 6 ASSESSEE IN THEIR STATEMENT ON OATH. MD. ISLAM (RS 4,05,000/-) DID NOT APPEAR BEFORE THE LD AO IN RESPONSE TO SUMMONS U/S 131 OF THE ACT. A CCORDINGLY, HE CONFIRMED THE ADDITION MADE TOWARDS LIABILITIES STANDING IN THE N AMES OF THESE PARTIES. OTHER THAN THESE PARTIES, ALL OTHER CREDITORS APPEARED AND CONFIRMED THE TRANSACTIONS AND ACCORDINGLY THE BALANCES SHOWN IN THEIR NAMES ARE TO BE ACCEPTED AS GENUINE. NO DETAILS WERE SUBMITTED IN RESPECT OF INSPECTION CHARGES OF RS 7,02,500/- A ND HENCE HE UPHELD THE ADDITION MADE THEREON. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 2.8. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE O UTSET, WE FIND THAT THE EXPENSE CREDITORS DID NOT DENY HAVING TRANSACTIONS WITH THE ASSESSEE. IT IS NOT IN DISPUTE THAT THOSE CREDITORS WERE NOT HAVING ANY IDEA OF INCOME TAX AND ACCORDINGLY HAD HANDED OVER THE 133(6) NOTICE TO ASSESSEES PARTNER AND HAD SIG NED ON THE REPLIES GIVEN BY THE ADVOCATE OF THE ASSESSEE. THE ENTIRE TRANSACTIONS HAVE BEEN CONFIRMED BY THEM BEFORE THE LD AO BY WAY OF DEPOSITION IN STATEMENT ON OATH . WE FIND THAT THE CREDITORS HAD ONLY STATED BEFORE THE LD AO THAT THEY ARE ALL SMALL TIM E LABOURERS AND WORKERS AND DO NOT HAVE THAT MUCH INCOME LEFT WITH THEM. WE FIND THAT THEY HAD DEPOSED CORRECTLY THAT IN AS MUCH AS THEIR INCOME COMPONENT IN THE ENTIRE SER VICES RENDERED TO THE ASSESSEE WOULD BE MINISCULE BUT THE TOTAL TRANSACTIONS CARRIED OUT THROUGH THEM FOR AND ON BEHALF OF THE ASSESSEE WOULD BE MORE. THE ASSESSEE HAD ENGAGED T HEM FOR RENDERING OF SPECIFIC SERVICES . THE ASSESSEE CANNOT BE EXPECTED TO KNOW HOW THOSE PARTIES RENDER THE SERVICES I.E EITHER ON THEIR OWN OR THROUGH OUTSOUR CED AGENCIES. FOR THE SERVICES RENDERED BY THOSE CREDITORS, THE ASSESSEE WOULD MAK E TOTAL PAYMENTS TO THEM. THOSE PARTIES IN TURN WOULD PAY THE RESPECTIVE DUES TO TH E OUTSOURCED AGENCIES SUCH AS TRUCK OWNERS AND LORRY DRIVERS. BY THIS PROCESS, THE AMO UNTS THAT WOULD BE LEFT WITH THOSE CREDITORS WOULD ONLY BE COMMISSION INCOME WHICH WOU LD BE MINISCULE. THE ENTIRE MODUS OPERANDI OF THESE TRANSACTIONS WERE EXPLAINED BY THOSE PARTIES IN THE STATEMENT GIVEN ON OATH BEFORE THE LD AO. THE FACT OF THES E CREDITORS RENDERING SERVICES TO THE ASSESSEE IS NOT DENIED OR DISPUTED BY THOSE PARTIES OR BY THE REVENUE. ALL THESE PARTIES 7 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 7 EXCEPT ONE PARTY HAD APPEARED BEFORE THE LD AO WITH THEIR RESPECTIVE IDENTITY PROOFS AND STATEMENT RECORDED ON OATH FROM THEM. HENCE THEY C ANNOT BE TREATED AS BOGUS CREDITORS OR BOGUS LIABILITIES. EVEN FOR THE PARTY WHO HAD N OT APPEARED BEFORE THE LD AO IN RESPONSE TO SUMMONS, REPLY U/S 133(6) OF THE ACT WA S GIVEN BY HIM DIRECTLY BEFORE THE LD AO. NO INFIRMITY HAS BEEN FOUND IN THE SAID REP LY BY THE LD AO. INFACT NO INFIRMITY HAS BEEN FOUND IN THE FACTUAL DETAILS SUBMITTED BY THE CREDITORS IN THE REPLY FILED IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT BY THE LD AO EXCEPT DRAWING SUSPICION WITHOUT ANY BASIS. WE FIND LOT OF FORCE IN THE ARGUMENT OF THE LD AR THAT THESE CREDITORS HAD NOT DEPOSED ANYTHING AGAINST THE ASSESSEE AND HENCE THE ASSESSEE CHOSE NOT TO GIVE ITS COUNTER OR SEEK FOR CROSS EXAMINATION BEFORE THE LD AO. WE FIND THAT ALL THOSE CREDITORS HAD ALSO DEPOSED THAT THEY HAD NOT MAINTAINED BOOKS OF ACCOUNTS AND HENCE THEY COULD NOT CONFIRM THE BALANCE OUTSTANDING AS ON 31.3.2013 . IN THESE CIRCUMSTANCES, THERE IS NOTHING WRONG IN THEY BEING DEPENDENT ON THE ASSESS EE FOR THE FACTS AND FIGURES WHICH WERE DULY CONFIRMED BY THEM IN WRITING BY SIGNING T HE REPLY LETTER TO NOTICE U/S 133(6) OF THE ACT. WE ALSO FIND THAT THE FACT OF REIMBURSE MENT OF EXPENSES MADE BY THE ASSESSEE IS NOT DISPUTED BY THE REVENUE BEFORE US A ND HENCE THE CORRESPONDING LIABILITY THEREON CANNOT BE DISPUTED. NONE OF THOSE CREDITORS HAD DENIED HAVING RENDERED SERVICES TO THE ASSESSEE. IN VIEW OF THE AFORESAID OBSERVAT IONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD CITA ERRED IN CONFIRM ING THE ADDITION MADE TOWARDS THESE LIABILITIES IN THE SUMS OF RS 2,96,800/- (MANOJ TIW ARI) ; RS 3,21,610/- (SAROJ TIWARI) AND RS 4,05,000/- (MD. ISLAM) TREATING THEM AS BOGU S LIABILITIES. 2.9. THE LD AR AT THE TIME OF HEARING STATED THAT T HE ADDITION MADE TOWARDS INSPECTION CHARGES OF RS 7,02,500/- WAS NOT PRESSED BY HIM. T HE SAME IS RECKONED AS A STATEMENT FROM THE BAR AND ACCORDINGLY THE SAME IS TREATED AS DISMISSED AS NOT PRESSED. 2.10. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE A SSESSEE IS PARTLY ALLOWED. 8 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 8 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE ACTION OF THE LD AO IN TREATING T HE INTEREST INCOME ON FIXED DEPOSITS AS INCOME FROM OTHER SOURCES IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE DERIVED INTEREST INCOME AS UNDER :- INTEREST FROM HDFC REALTY FUND - RS 2,59,071/- INTEREST ON FD - RS 7,71,238/- INTEREST ON LOAN - RS 2,53,018/- --------------------- RS 12,83,327/- THIS INTEREST INCOME OF RS 12,83,327/- WAS OFFERED BY THE ASSESSEE AS BUSINESS INCOME , WHICH WAS SOUGHT TO BE SHIFTED TO BE OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCES BY THE LD AO. PURSUANT TO THIS SHIFT, THE ASSESSEE DID NOT HAVE POSITIVE BUSINESS INCOME . ACCORDINGLY, THE LD AO SOUGHT TO DISALLOW THE REMUNERATION PAID TO PARTNERS IN THE SUM OF RS 4,00,000/- U/S 40(B) OF THE ACT IN TH E ABSENCE OF POSITIVE BUSINESS INCOME. THE LD CITA OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO PROVE ANY BUSINESS CONNECTION WITH REGARD TO THE AFORESAID INTEREST IN COME AND ACCORDINGLY CONFIRMED THE ACTION OF THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD AR ARGUED THAT THIS INTEREST INCOME HAS BEEN DERIVED BY THE ASSESSEE FIRM FOR THE PAST SEVERAL YEARS AND HAS BEEN ACCEPTED AS BUSINESS INCOME BY THE REVENUE, ALTHOUGH THE ASSESS MENTS WERE FRAMED ONLY U/S 143(1) OF THE ACT UPTO ASST YEAR 2012-13. HE ARGUED THAT FOR THE ASST YEAR 2014-15, THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT DATED 1 5.6.2016 WHEREIN THE INTEREST INCOME WAS ACCEPTED AS BUSINESS INCOME. WE HAVE GON E THROUGH THE ASSESSMENT ORDER FOR THE ASST YEAR 2014-15 PLACED ON RECORD BY THE L D AR. WE FIND THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE TA XABILITY OF INTEREST INCOME OR EVEN THE EXISTENCE OF INTEREST INCOME , IF ANY, IN THE S AID ASSESSMENT YEAR AS THE COMPUTATION 9 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 9 OF INCOME WAS NOT PLACED ON RECORD BEFORE US FOR TH E ASST YEAR 2014-15. IN THIS REGARD, WE FIND THAT AT THE OUTSET, THERE IS NO FINDING IN THE ASSESSMENT ORDER OR IN THE LD CITAS ORDER REGARDING THE PURPOSE OF MAKING INVESTMENT IN DEPOSITS AND MUTUAL FUND VIS-A-VIS THE BUSINESS CONNECTION THEREON. THIS FINDING IS CRUCIAL TO DETERMINE WHETHER THE INTEREST INCOME IS TO BE TAXED AS BUSINESS INCOME O R OTHER SOURCES. HENCE IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DEEM IT FIT AND APPROP RIATE, TO REMAND THIS ISSUE TO THE FILE OF THE LD AO , FOR DE NOVO ADJUDICATION OF THIS ISSUE IN ACCORDANCE WITH LAW. THE ISSUE OF ALLOWABILITY OF REMUNERATION TO PARTNER U/S 40(B) O F THE ACT IS CONSEQUENTIAL IN NATURE AS IT WOULD DEPEND ON THE GROUND TO BE DECIDED IN RESP ECT OF INTEREST INCOME OF RS 12,83,727/-. ACCORDINGLY, THE GROUNDS 3 & 4 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. THE GROUND NO. 1, 5 & 6 RAISED BY THE ASSESSEE A RE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 05.10.2018 SD/- SD/- [A.T. VARKEY] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 05.10.2018 SB, SR. PS 10 ITA NO.1859/KOL/2016 M/S KUNAL EXIM A.YR. 2013-14 10 COPY OF THE ORDER FORWARDED TO: 1. M/S KUNAL EXIM, 17, GANESH CHANDRA AVENUE, 1 ST FLOOR, KOLKATA-700013. 2. ITO, WARD-31(1), KOLKATA, 10B, MIDDLETON ROW, 4 TH FLOOR, KOLKATA 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S