A.C.I.T., Circle-30,Kolkata, Kolkata V. Shri Usha Ranjan Sarkar, Kolkata

ITA 2674/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1768 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 01-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2013
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE JCITLD
• Assessee Lawyers: RAVI TULSIYAN FCA LD
• Keywords: Business income; Earning of tax free income
• Section: 14A

Judgement Text

1 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIA L MEMBER I.T.A NO. 2674/KOL/2013 A.Y: 2009-10 ASSTT. COMMISSIONER VS. USHA RANJAN SARKAR INCOME-TAX, CIRCLE-30 PAN: ASPPS7854M KOLKATA [ APPELLANT] [RESPONDENT] FOR THE APPELLANT : SHRI PINAKI MUKHERJEE, JCIT, LD.SR. DR FOR THE RESPONDENT : SHRI RAVI TULSIYAN, FCA, LD. AR DATE OF HEARING : 01-03-2017 DATE OF PRONOUNCEMENT : 24-05-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER DT. 02-09-2013 OF CIT(A), XIV, KOLKATA FOR THE ASSESSMENT YEAR 2009-1 0. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN IGNORING THE FACTS THAT AS PER SEC. 14A(3) OF THE ACT, RULE 8D IS APPLICABLE, EVEN IF ASSESSEE DOES NOT CLAIM ANY EXPENDITURE AGAINST EXE MPTED INCOME. 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT LESS RECEIPT OF RETENTION MONEY CANNOT BE AN ALLOWABLE DEDUCTION AGAINST BUSINESS RECEIPT. 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT INTEREST INCO ME FROM FIXED DEPOSITS SHALL BE TREATED AS 'INCOME FROM OTHER SOURCES'. 4) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, M ODIFY, INCLUDE OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND ENGAGED IN THE CONTRACTOR BUSINESS. THE ASSESSEE FI LED HIS RETURN OF INCOME DECLARING LOSS OF RS.63,99,360/-. UNDER SCRU TINY, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1 ,07,31,890/-, WHEREIN 2 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR THE ADDITIONS/DISALLOWANCES OF RS.9,55,719/-, RS.1, 61,75,533/- AND RS.14,57,425/- WERE MADE ON ACCOUNT OF U/S. 14A, RE TENTION MONEY/SECURITY DEPOSIT AND TREATED INTEREST EARNED ON FIXED DEPOSITS AS INCOME FROM OTHER SOURCES RESPECTIVELY. 4. GROUND NO.1 IS RELATING TO DISALLOWANCE OF RS.9 ,55,719/- MADE UNDER RULE 8(1),(II) AND (III) FOR THE PURPOSE OF C OMPUTATION OF EXPENDITURE U/S. 14A OF THE ACT, THE AO FOUND THAT THE ASSESSEE CLAIMED THAT HE EARNED AN AMOUNT OF RS.48,236/- AS EXEMPT INCOME AN D DISALLOWED NO EXPENDITURE IN EARNING SUCH INCOME. THE AO AFTER EX AMINING THE ACCOUNTS OBSERVED THAT THE ASSESSEE BORROWED FUNDS AND UTIL IZED THE SAME FOR MAKING INVESTMENT AND IN TURN EARNED SUCH EXEMPT IN COME. THE AO PROCEEDED TO PROPOSE DISALLOWANCE U/S. 14A R.W.R 8D OF THE IT RULES AND ASSESSEE WAS ASKED BY THE AO WHY THE EXPENSES INCUR RED AND CLAIMED TOWARDS EXEMPT INCOME SHOULD NOT BE DISALLOWED U/S. 14 R.W.R 8D. THE ASSESSEE VIDE HIS LETTER DT. 11-11-2011 AND 25-11-2 011 STATED THAT OUT OF HIS OWN FUNDS MADE INVESTMENTS AND URGED NOT TO D ISALLOW ANY EXPENDITURE. THE AO, HOWEVER, COMPUTED THE DISALLOW ANCE OF EXPENDITURE UNDER RULE 8D(I), (II) AND (III) OF THE IT RULES AS RS.9,55,719/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT-A. THE CIT-A AFTER CONSIDERING THE BALANCE SHEET AS ON 31- 03-2009 DELETED THE SAID DISALLOWANCE BY OBSERVING THAT THE ASSESSEE HA D ENOUGH FUNDS IN HIS HAND TO SUPPORT THE INVESTMENTS. RELEVANT PORTION O F WHICH IS REPRODUCED HEREIN BELOW:- THE APPELLANT HAS SUBMITTED BEFORE ME THAT THE I NTEREST PAID BY THE APPELLANT'S PROPRIETORSHIP CONCERN HAS NO RELATION WITH THE INV ESTMENTS MADE BY, THE APPELLANT. INVESTMENTS HAVE BEEN MADE BY THE APPELLANT IN HIS INDIVIDUAL BALANCE SHEET WHEREIN NO INTEREST HAS BEEN PAID ON ANY BORROWINGS. THE ACCOU NTS OF THE PROPRIETORSHIP CONCERN ARE COMPLETELY SEPARATE FROM THE PERSONAL BALANCE S HEET OF THE APPELLANT. THE APPELLANT HAS ALSO SUBMITTED THAT IT HAD A POSITIVE BALANCE A S CAPITAL ACCOUNT IN THE PROPRIETORSHIP CONCERN AND THEREFORE, IT CANNOT ALSO BE ALLEGED TH AT THE LOAN FUNDS OF THE PROPRIETORSHIP CONCERN HAD BEEN WITHDRAWN BY THE PROPRIETOR FOR IN VESTMENTS IN SHARES. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND FIND NO INFIRMITY WITH THE SAME. ANY DISALLOWANCE OF INTEREST IN THE HANDS OF THE APPELL ANT COULD HAVE ONLY BEEN MADE IF THE LOAN FUNDS OF THE APPELLANT HAD BEEN UTILIZED FOR P URCHASE OF SHARES. IT IS CLEAR FROM THE ACCOUNTS OF THE APPELLANT THAT THE LOAN FUNDS HAVE BEEN UTILIZED IN THE PROPRIETORSHIP CONCERN OF THE APPELLANT WHEREIN NO INVESTMENT HAS BEEN MADE IN SHARES WHICH HAS LED TO EXEMPT DIVIDEND INCOME. EVEN, IN RESPECT OF THE DISALLOWANCE OF ITEM NO.(III) OF RULE 3 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR 8D IT IS SEEN THAT EXPENSES OF THE PROPRIETORSHIP C ONCERN HAVE BEEN DISALLOWED ON ACCOUNT OF THE SAME, ALTHOUGH THE INVESTMENTS DID N OT PERTAIN TO THE PROPRIETORSHIP CONCERN. THE INVESTMENTS ARE HELD BY THE APPELLANT IN HIS INDIVIDUAL CAPACITY AND HAVE BEEN REFLECTED IN HIS PERSONAL BALANCE SHEET. NO EX PENSES HAVE BEEN CLAIMED IN HIS PERSONAL CAPACITY IN HIS BALANCE SHEET AND THEREFOR E, NO EXPENSES COULD HAVE BEEN DISALLOWED SINCE NONE WAS CLAIMED. THE EXPENSES OF THE PROPRIETORSHIP CONCERN CANNOT BE DISALLOWED WHEN THE INVESTMENTS HAVE NOT BEEN MA DE BY THE PROPRIETORSHIP CONCERN AND THE INVESTMENTS HAVE NOTHING TO DO WITH THE ACT IVITIES OF THE PROPRIETORSHIP CONCERN. THE POSITIVE CAPITAL ACCOUNT BALANCE OF THE APPELLA NT IN HIS PROPRIETORSHIP CONCERN CLEARLY PROVES THAT THE APPELLANT HAS INVESTED IN THE FIRM AND NOT BORROWED FROM IT. ALSO THERE IS CLEAR SEGREGATION OF THE ACTIVITIES OF THE PROPRIET ORSHIP CONCERN FROM HIS PERSONAL ACTIVITIES. IN VIEW OF THE SAME, I DELETE THE ADDIT ION OF RS.9,55,719/- ON ACCOUNT OF SECTION 14A'READ WITH RULE 8D. 6. THE LD.DR SUBMITTED THAT THE ASSESSEE EARNED DIV IDEND INCOME AND DURING THE ASSESSMENT PROCEEDING THE AO BY EXAMININ G THE RECORDS FOUND THAT THE ASSESSEE BORROWED FUNDS AND PAID INTEREST ON SUCH LOANS. HE RELIED ON THE ORDER OF THE AO. 7. THE LD.AR SUBMITS THAT ALL THE DETAILS HAVE BEE N PROVIDED TO THE AO. HE SUBMITS THAT THE ASSESSEE PRODUCED THE BALANCE SHEET IN THE ASSESSMENT PROCEEDING TO SHOW THAT THE ASSESSEE HAS SUFFICIENT FUNDS TO MAKE THE INVESTMENT. THE AO WITHOUT CONSIDERING THE SAME ARBITRARILY MADE THE DISALLOWANCE UNDER RULE 8D(II) OF THE IT R ULES AND URGED TO DISMISS THE GROUND RAISED BY THE REVENUE. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE INVESTMENT MADE BY THE ASS ESSEE IN HIS INDIVIDUAL CAPACITY AND THE SAME HAS BEEN REFLECTED IN THE BAL ANCE SHEET, WHICH HAS BEEN RIGHTLY OBSERVED BY THE CIT-A. IT IS ALSO NOTI CED THAT THE CIT-A FOUND THAT THE ASSESSEE CLAIMED NO EXPENSES TOWARDS EARNI NG OF DIVIDEND INCOME. WE FIND THAT THE DISALLOWANCE CANNOT GO BEY OND THE EXEMPT INCOME EARNED. ACCORDINGLY, THE ORDER OF THE CIT-A IS JUSTIFIED AND NEEDS NO INTERFERENCE. ACCORDINGLY, THE GROUND NO.1 RAISE D BY THE REVENUE IS DISMISSED. 9. GROUND NO.2 IS RELATING TO DISALLOWANCE OF RS. 1 ,61,75,533/-MADE ON ACCOUNT OF RETENTION OF MONEY AND SECURITY DEPOSIT. 10. DURING THE COURSE OF SCRUTINY PROCEEDINGS THE A O FOUND THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF RETENTION OF MONEY AND SECURITY 4 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR DEPOSITS. UNDER NOTICE, THE AO REQUIRED THE ASSESSE E TO EXPLAIN HOW THE AMOUNT OF SECURITY DEPOSIT IS DEDUCTIBLE AS EXPENDI TURE SINCE THE ASSESSEE DID NOT CLAIM THE SAME IN THE PREVIOUS YEAR. THE AS SESSEE EXPLAINED THAT THE DEDUCTION WAS CLAIMED IN THE YEAR UNDER CONSIDE RATION BY RELYING ON THE DECISION OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. SIMPLEX CONCRETE PILES (I) PVT. LTD REPORTED IN 179 ITR 008. THE AO EXAMINING THE RECORDS OPINED THAT THERE WAS NO SUCH CLAUSE IN AGREEMENTS REGARDING DEDUCTION OF RETENTION MONEY B Y THE PARTIES, WHO HAVE GIVEN CONTRACT TO THE ASSESSEE. THE AO ALSO OP INED THAT THE FACTS IN THE ABOVE REFERRED DECISION ARE DIFFERENT IN RESPEC T OF PROJECT COMPLETION METHOD HAS BEEN FOLLOWED IN THE SAID DECISION WHERE AS THE ASSESSEE IS FOLLOWING THE PERCENTAGE COMPLETION METHOD OF ACCOU NTING, THEREBY THE AO ADDED THE AMOUNT OF RS.1,61,75,533/- TO THE TOTA L INCOME OF THE ASSESSEE. 11. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT-A. BEFORE HIM THE ASSESSEE CONTENDED THAT THE RETENTIO N OF MONEY IS LINKED TO THE CONDITION OF SATISFACTORY PERFORMANCE OF THE CONTRACT. THE PAYMENT OF RETENTION OF MONEY DOES NOT ACCRUE TO THE ASSESS EE. THE ASSESSEE PLACED HIS RELIANCE ON THE SAID DECISION IN THE CAS E OF SUPRA. THE CIT-A CONSIDERING THE FACTS IN TERMS OF DECISION OF SUPRA HELD THAT NO INCOME ON ACCOUNT OF SECURITY DEPOSIT OR RETENTION MONEY HAS ACCRUED TO ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND AS SUCH HE DELETED THE ADDITION MADE BY THE AO BY STATING AS UNDER:- 4.3 GROUND NO. 3 IS IN RESPECT OF THE DISALLOWANCE OF R S.1,61,75,533/- ON ACCOUNT OF RETENTION MONEY/SECURITY DEPOSIT DEDUCTED BY VARIOU S AUTHORITIES FROM THE BILLS RAISED BY THE APPELLANT WHICH ARE ONLY TO BE PAID ON SATISFACTORY COMPLETION OF THE PROJECT. THE APPELLANT HAS RELIED ON THE AGREEMENTS MADE WITH THE VARIOUS AUTH ORITIES BEFORE ME AND HAS ALSO PRODUCED THE EVIDENCES OF DEDUCTION OF SECURITY DEPOSIT / RE TENTION MONEY BY THE VARIOUS PARTIES / AUTHORITIES. THE DEDUCTION OF SECURITY DEPOSIT BY T HE SAID AUTHORITIES IS NOT IN DISPUTE AND IS EVIDENT FROM THE SUPPORTING DOCUMENTS ISSUED BY THE VARIOUS 'AUTHORITIES. THE AGREEMENTS ENTERED INTO BY THE APPELLANT WITH THE VARIOUS PART IES ALSO CLEARLY SHOWN THAT THE SECURITY DEPOSIT IS ONLY TO BE PAID TO THE APPELLANT ON SATI SFACTORY COMPLETION OF THE PROJECT OR ON VARIOUS OTHER TERMS AND CONDITIONS. THE APPELLANT BEFORE ME HAS RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SI MPLEX CONCRETE PILES (INDIA) PVT. LTD. REPORTED IN 179 ITR 008 WHICH IS DIRECTLY ON THE SAID ISSUE. IN THE SAID DECISION, THE HON'BLE HIGH COURT AT 'CALCUTTA HELD THAT SECURITY DEPOSIT DEDUCTED BY THE VARIOUS AUTHORITIES CANNOT BE SAID TO HAVE ACCRUED TO AN ASSESSEE DURING THE YEAR IN WHIC H THE BILLS ARE RAISED SINCE THE RECEIPT OF THE SECURITY DEPOSIT IS CONTINGENT UPON HAPPENING OF A FUTURE EVENT. THE SAID CASE LAW DIRECTLY APPLIES IN THE CASE OF THE APPELLANT. THE FACTS OF THE APPELLANT CLEARLY SHOW THAT THE SECURITY, DEPOSIT DEDUCTED BY THE VARIOUS PARTIES ARE ALSO RE CEIVABLE IN SUBSEQUENT YEARS BY THE 5 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR APPELLANT' ON SATISFACTORY COMPLETION OF THE PROJEC T OR ON OTHER VARIOUS TERMS AND CONDITIONS TO BE FULFILLED BY THE APPELLANT. THEREFORE, IN VIEW O F THE CALCUTTA HIGH COURT'S DECISION, IT IS CLEAR THAT NO INCOME ON ACCOUNT OF SECURITY DEPOSIT OF RS .1,61,75,533/- HAS ACCRUED TO THE APPELLANT DURING THE PRESENT ASSESSMENT YEAR. IN VIEW OF THE SAME, I DELETE THE ADDITION OF RS.1,61,75,533/- MADE BY THE A.O. 12. THE LD.DR SUBMITS THAT THE ASSESSEE DID NOT CLA IM THE DEDUCTION IN THE EARLIER YEARS AND AS SUCH A CLAIM MADE IN THE Y EAR UNDER CONSIDERATION IS NOT MAINTAINABLE. HE FURTHER SUBMI TS THAT THE AO FOUND THAT NO PROPER ACCOUNTING METHOD WAS FOLLOWED BY TH E ASSESSEE AND THE AUDITOR NEVER MENTIONED ABOUT THE RETENTION OF MONE Y AND SECURITY DEPOSIT. THE LD. DR SUBMITS THAT THE FACTS IN THE C ASE OF SUPRA ARE DISTINGUISHABLE, WHICH HAS RIGHTLY BEEN DISCUSSED B Y THE AO IN HIS ORDER WITH THE FACTS OF THE PRESENT CASE. THE LD.DR FURTH ER SUBMITS THAT THE AO HAS RIGHTLY DISALLOWED THE SAME BY FOLLOWING THE RU LE OF CONSISTENCY SINCE THE ASSESSEE DID NOT CLAIM THE DEDUCTION IN THE EAR LIER YEAR. THE LD. DR URGED TO ALLOW THE GROUND OF APPEAL OF THE REVENUE. 13. ON THE OTHER HAND, THE LD.AR SUBMITS THAT THE A SSESSEE IS A GOVT. CONTRACTOR AND INVOLVED IN VARIOUS PROJECTS OF CENT RAL & STATE GOVT. SUCH AS ROADS, BRIDGES, HARBOURS, IRRIGATION ETC. THE LD .AR FURTHER SUBMITS THAT THE PERCENTAGE OF RETENTION MONEY IS NOT THE SAME I N ALL THE CONTRACTS. IT VARIES FROM 5% TO 10% AND REFERRED TO THE DETAILS O F CONTRACT ANNEXED AT PAGE-56 OF THE PAPER BOOK. HE ALSO SUBMITS THAT THE FINDING OF THE AO IS WRONG THAT THERE WAS NO RETENTION CLAUSE IN THE A GREEMENT AND AS SUCH REFERRED TO PAGE 109 OF THE PAPER BOOK AND ARGUED T HAT THERE IS CLAUSE 28 OF RETENTION MONEY. THE LD.AR PLACED HIS RELIANCE O N THE DECISION IN THE CASE OF SUPRA AND ARGUED THAT THE ASSESSEE HAD NO R IGHT TO CLAIM ANY PART OF THE RETENTION MONEY TILL THE VERIFICATION OF SAT ISFACTORY EXECUTION OF THE CONTRACT WORK AND ARGUED THAT THE RETENTION OF MONE Y CANNOT BE SAID TO BE ACCRUED TO ASSESSEE IN THE YEAR UNDER CONSIDERAT ION. IN SUPPORT OF THE CONTENTION, HE RELIED ON THE ORDER OF THE CIT-A. 14. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE RETENTION MONEY AND SECURI TY DEPOSITS ARE RETAINED BY THE PARTIES, WHO HAVE GIVEN THE CONTRAC T TO ASSESSEE AND THE 6 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR SAID AMOUNTS WOULD BE REFUNDED AND ACCRUED TO ASSES SEE ON SATISFACTORY COMPLETION OF CONTRACT WORK. TILL THEN THE ASSESSEE HAD NO RIGHT TO CLAIM ANY PARTS OF RETENTION MONEY, WHICH RETAINED BY THE PARTIES. THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF SUPRA HELD TH AT ALL THE RECEIPTS OF RETENTION AND SECURITY DEPOSIT ARE CONTINGENT AND H APPENING OF FUTURE EVENT. THE RETENTION AND SECURITY DEPOSIT DEDUCTED BY VARIOUS PARTIES CANNOT BE SAID TO HAVE BEEN ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IN WHICH YEAR THE BILLS ARE RAI SED. 15. RESPECTFULLY FOLLOWING THE ABOVE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A AND IT IS JUSTIFIED. WE UPHOLD THE SAME. GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 16. GROUND NO. 3 IS RELATING TO AN ADDITION OF RS. 14,57,425/- MADE ON ACCOUNT OF INTEREST EARNED ON FIXED DEPOSITS. THE A O ADDED THE SAME BY TREATING AS INCOME FROM OTHER SOURCES. 17. THE AO FOUND THAT THE ASSESSEE EARNED AN AMOUN T OF RS.14,57,425/- AS INTEREST INCOME AND THE SAME HAS BEEN SET OFF AGAINST THE INTEREST EXPENDITURE AND DISCLOSED NET INTEREST EXPENDITURE IN THE ACCOUNT. IN EXPLANATION, THE ASSESSEE SUBMITTED THA T AN AMOUNT OF RS. 1,60,174/- RECEIVED AS REBATE ON LOAN FROM ICICI BA NK. AN AMOUNT OF RS.12,96,711/- RECEIVED ON ACCOUNT OF FIXED DEPOSIT S MADE FOR THE PURPOSE OF BANK GUARANTEE TOWARDS AWARD OF CONTRACT AND SECURITY DEPOSIT FOR THE CONTRACTS. THE AO OPINED THAT THE ASSESSEE IS NOT IN THE BUSINESS OF EARNING OF INTEREST AND THEREFORE, TREATING THE SAME AS INCOME FROM OTHER SOURCES ADDED TO THE TOTAL INCOME OF THE ASSE SSEE. 18. THE CIT-A IN THE FIRST APPELLATE PROCEEDING FOU ND THAT THE INTEREST INCOME RECEIVED BY THE ASSESSEE HAS DIRECT CONNECT ION WITH THE BUSINESS OF THE ASSESSEE AND DELETED THE SAID ADDITION BY TR EATING THE SAME AS BUSINESS INCOME BY OBSERVING AS UNDER:- I HAVE PERUSED THE SUBMISSION OF THE APPELLANT AND I AM IN AGREEMENT WITH THE SAME. THE INTEREST INCOME RECEIVED BY THE APPELLANT HAS DIRECT CONNECTION WITH THE 7 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR BUSINESS OF THE APPELLANT. IT IS NOT A CASE WHERE A PPELLANT HAS DEPLOYED ITS SURPLUS FUND FOR EARNING INTEREST INCOME BUT IS A CASE WHERE THE DEPOSITS HAD TO BE NECESSARILY MADE FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THERE FORE, THE RECEIPTS HAVE TO BE NECESSARILY TREATED AS BUSINESS INCOME AND NOT THE INCOME FROM OTHER SOURCES. IN VIEW OF THE SAME, I DIRECT THAT THE RECEIPT OF RS.14,57, 425/- TO BE TREATED AS BUSINESS INCOME AND NOT THE INCOME FROM OTHER SOURCES. 19. THE LD.DR RELIED ON THE ORDER OF THE AO. 20. THE LD.AR SUBMITS THAT THE SAID FIXED DEPOSITS WERE NECESSITATED DUE TO REQUIREMENT OF CONTRACTS UNDERTAKEN BY THE A SSESSEE FOR PROVIDING BANK GUARANTEE AND SECURITY DEPOSITS. THE ASSESSEE MADE SUCH FIXED DEPOSITS WITH THE BANK ON CONDITION FOR GETTING BAN K GUARANTEE FOR THE PURPOSE OF GETTING CONTRACTS, THEREFORE, THE INCOME EARNED ON SUCH FIXED DEPOSITS SHALL BE CONSIDERED AS BUSINESS INCOME. IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE ORDER OF THE CIT-A IN DIRECTING THE AO TO DELETE THE SAME BY TREATING AS BUSINESS INCOME. 21. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE FILED NECESSARY E VIDENCES AVAILABLE AT PAGES 57-86 OF THE PAPER BOOK, WHEREIN IT SHOWS AT PAGE: 59 THAT THE ASSESSEE HAS EARNED INTEREST FROM UCO BANK, INDIAN OVERSEAS BANK AND SBI BANK. THE ASSESSEE GOT REFUND FROM ICICI BANK O N ACCOUNT OF EXCESS AMOUNT PAID, DETAILS OF WHICH ARE AVAILABLE AT PAGE S 80 TO 86 OF THE PAPER BOOK. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS MAD E FIXED DEPOSITS FOR OBTAINING BANK GUARANTEE TOWARDS EARNEST MONEY IN T ERMS OF CONTRACT AND REBATE RECEIVED FROM THE ICICI BANK TOWARDS EXCESS EMI PAID BY THE ASSESSEE. WE FIND THAT THE ASSESSEE BEING A CONTRAC TOR AND IN ORDER TO SECURE THE CONTRACT WORK BANK GUARANTEE IS REQUIRED FOR SMOOTH FUNCTIONING OF HIS CONTRACT BUSINESS. THEREFORE, TH E INTEREST AS EARNED AND REFUND BY THE ASSESSEE IS TO BE TREATED AS BUSINESS INCOME. THE CIT-A WAS JUSTIFIED IN DOING SO. WE UPHOLD THE ORDER OF T HE CIT-A. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8 ITA NO.2674/KOL/2013 SHRI USHA RANJAN SARKAR 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 -05-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :24-05-2017 ORDER PRONOUNCED BY SD/- SD/- W.A S.S.V.R A.M J.M PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/DEPARTMENT ASSISTANT COMMISSIONER OF IN COME TAX, CIR-3 0, 2, GARIAHAT ROAD (S), KOLKATA-68. 2 RESPONDENT/ASSESSEE SHRI USHA RANJAN SARKAR C/O SHRI PRANAB CHATTERJEE 55/3C BALLYGUNGE CIRCULA R ROAD, KOLKATA- 29. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P RIVATE SECRETARY HEA D OF OFFICE/DDO I TAT, KOLKATA