NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD, MUMBAI V. ACIT CIR 10(1), MUMBAI

ITA 2923/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54965 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 28-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARTHSAARATHI
• Assessee Lawyers: SUNIL NATH
• Keywords: Business income; Earning of tax free income
• Section: 14A; 115JB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI T.R. SOOD (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 2923/MUM/2010 ASSESSMENT YEAR 2006-07 M/S. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD., AKRUTI CORPORATE PARK, 1 ST FLOOR, LBS MARG, KANJUR MARG (W), MUMBAI-400078 PAN-AAACN 1797L VS. THE ACIT, CIRCLE 10(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUNIL NATH RESPONDENT BY: SHRI PARTHSAARATHI DATE OF HEARING : 28.07.2011 DATE OF PRONOUNCEMENT:26.8.2011 O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 28.1.2010 PASSED BY THE LD. CIT(A)-21 FOR THE ASSESSMENT YEAR 2006- 07. 2. THE ASSESSEE, NATIONAL COMMODITY & DERIVATES EXC HANGE LTD. (NCDEX) IS THE PREMIERE COMMODITY EXCHANGE IN INDIA PROVIDIN G A WORLD CLASS PLATFORM FOR MARKET TO TRADE IN RANGE OF COMMODITIES. THE EX CHANGE IS AN ONLINE REAL TIME ELECTRONIC EXCHANGE. 3. THE ASSESSEE HAS EARNED A DIVIDEND INCOME OF RS. 2,83,48,515/- FROM VARIOUS MUTUAL FUNDS, WHICH IS EXEMPTED UNDER THE P ROVISIONS OF SECTION ITA NO. 2923/M/2010 2 10(35) OF THE ACT. THE ASSESSEE WAS CALLED UPON TO EXPLAIN, WHY THE PROVISIONS OF SECTION 14-A READ WITH RULE 8-D OF TH E ACT AND RULES BE APPLIED FOR THE DISALLOWANCE OF EXPENSES INCURRED ON EARNIN G AN EXEMPTED INCOME. 4. THE ASSESSEE OFFERED AN EXPLANATION STATING THAT THE DIVIDEND HAS BEEN EARNED ON THE INVESTMENT MADE ON SHORT TERM BAS IS AND THERE IS HARDLY ANY ELEMENT OF EXPENSES INCURRED IN EARNING SUCH IN COME AS ONCE THE APPLICATION IS MADE IN VARIOUS FUNDS, THE ALLOTMENT THEREOF FOLLOWS AND DIVIDEND THEREAFTER REQUIRED ARE IN TERMS OF TIME F OR DEPOSITING THE DIVIDEND WARRANT INTO THE BANK AND KEEPING RECORDS OF SUCH IN VESTMENTS FROM TIME TO TIME. THIS MAY INVOLVE THE SALARY OF ONE PERSON FRO M THE FINANCE DEPARTMENT WHO LOOKS AFTER SUCH INVESTMENTS. THE ASSESSEE SUBM ITTED THAT IT WOULD HAVE NO OBJECTION IF SOME AMOUNT WAS BEING DISALLOWED ON THE BASIS OF EXPENDITURE DIRECTLY RELATED TO THE EARNING OF SUCH INCOME. 5. THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 1, 20,17,380/- UNDER PROVISIONS OF SEC. 14A R.W. RULE 8D OF THE ACT ON A CCOUNT OF EXPENDITURE INCURRED ON EARNING THE EXEMPTED INCOME. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). 7. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. IN THE CASE UNDER CONSIDERATION THE APPELLANT EARNED DIVIDEND I NCOME OF RS.2.83 CRORES WHICH WAS CLAIMED AS EXEMPT. SINCE THIS DIVI DEND INCOME DID NOT FORM PART OF TOTAL INCOME THEREFORE, PROVISIONS OF SECTION 14A WERE CLEARLY ATTRACTED. IN THE FACTS AND CIRCUMSTANCED, THE AO WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 14A AND MAKIN G A DISALLOWANCE AS PER FORMULA PROVIDED UNDER RULE 8 D OF THE RULES. T HE AO WORKED OUT DISALLOWANCE AS UNDER : DISALLOWANCE U/S.14A R.W. RULE 8D I) EXPENDITURE DIRECTLY RELATING TO EXEMPT INCOME NIL II) INTEREST DISALLOWABLE A = INTEREST = 51,49,000/- (4313000 + 836000) B = AVERAGE VALUE OF INVESTMENT = 14,711,91,500/- ITA NO. 2923/M/2010 3 C =AVERAGE OF TOTAL ASSETS = 162,50,76,000/- INTEREST DISALLOWABLE = A X B/C = 46,61,422/- III) 0.5% OF AVERAGE VALUE OF INVESTMENTS 0.5% OF 14,711,91,500 = 73,55,958 TOTAL DISALLOWANCE EU/S.14A = AGGREGARE OF (I), (II ) & (III) I.E. = NIL + 46,61,422 + 73,55,958/- = RS.1,20,17,380/- THE APPELLANTS VARIOUS CONTENTIONS / ARGUMENTS ARE NOT ACCEPTABLE IN VIEW OF DECISIONS OF VARIOUS COURTS / TRIBUNALS. IN THE CASE OF SAKSARIA BISWAN SUGAR FACTORY (ITA NO.7692/ M/03) DECIDED BY B BENCH OF MUMBAI TRIBUNAL ON 22.01.2007 FOR THE AS SESSMENT YEAR 2000-01 AND IN THE CASE OF CITY GROUP FINANCE LTD. (2007) 108 ITD 457 (MUM), IT WAS HELD THAT SECTION 14A(I) IS SUBSTA NTIVE AND 14A(2)(3) ARE PROCEDURAL IN NATURE AND APPLIES TO A LL PENDING MATTERS, REGARDLESS THEY BEING DIRECT OR INDIRECT, FIXED OR VARIABLE, MANAGERIAL OR FINANCIAL EXPENSES. IT HAS BEEN HELD IN VARIOUS DEC ISIONS THAT PROVISIONS OF SECTION 36(1)(III) AND SECTION 57(III) ARE SUBJE CT TO SECTION 14A. IT HAS ALSO BEEN HELD IN VARIOUS CASES THAT PROVISIONS OF SECTION 14A ARE APPLICABLE WHETHER THE EXEMPT INCOME IS RECEIVED OR NOT. IN CASE OF SANCHAYTA MERCANTILE (2008) 25 SOT 57 (MUM), IT WAS HELD THAT DISALLOWANCE U/S.14A COULD EXCEED THE EXEMPT INCOME . THE SPECIAL BENCH OF MUMBAI ITAT IN CASE OF DAGA CAPITAL MANAGE MENT REPORTED IN (2009) 117 ITD 169 HELD THAT SUBSECTION (2) & (3 ) OF SECTION 14A WERE PROCEDURAL IN NATURE AND WERE APPLICABLE RETRO SPECTIVELY, PROVISIONS OF SECTION 14A APPLIES TO ALL DIRECT AND INDIRECT EXPENSES, THE SECTION 14A WOULD APPLY WHETHER THE SHARES WERE HEL D AS INVESTMENT OR STOCK IN TRADE, THE PROVISIONS OF SECTION 14A AR E APPLICABLE WITH RESPECT OF DIVIDEND INCOME EARNED BY THE ASSESSEE E NGAGED IN THE BUSINESS OF DEALING WITH SHARES AND SECURITIES, ON THE SHARES HELD AS STOCK IN TRADE WHEN EARNING OF SUCH DIVIDEND INCOME IS INCIDENTAL TO THE TRADING IN SHARES. THEREAFTER, THE SPECIAL BENC H, DELHI IN CASE OF CHIMINVEST LTD, REPORTED IN (2009) 27 DTR (DEL.)(SB )(TRIB.)/82 ALSO DECIDED VARIOUS ISSUES IN RESPECT TO APPLICABILITY OF SECTION 14A. AFTER INSERTION OF RULE 8D IT IS MANDATORY TO WORK OUT THE DISALLOWANCE U/S.14A AS PER FORMULA PROVIDED IN RUL E 8D OF THE RULES. THOUGH THE AO CALCULATED THE DISALLOWANCE AS PER FO RMULA, THE APPELLANT HAS ARGUED THAT IN THE SAID FORMULA THE F IGURE OF AVERAGE OF TOTAL ASSETS WAS INCORRECTLY TAKEN BY AO AT RS.162 .50 CRORE AS AGAINST THE ACTUAL FIGURE OF RS.147.11 CRORE. THE APPELLANT ARGUED THAT THE AO COMMITTED SUCH MISTAKE SINCE THE AO REDUCED THE FIG URES OF CURRENT LIABILITIES. THE AO IS DIRECTED TO VERIFY THE APPEL LANTS CONTENTION OF AVERAGE OF TOTAL ASSET AND RE-WORK OUT THE DISALL OWANCE AS PER RULE 8D AFTER TAKING INTO CONSIDERATION APPELLANTS SUBM ISSIONS IN THIS REGARD. THIS GROUND OF APPEAL IS DISMISSED. ITA NO. 2923/M/2010 4 8. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE MATERIAL ON RECORD. 9. WE HEARD BOTH THE PARTIES. WE FIND THAT IN THE CASE OF NATIONAL STOCK EXCHANGE THE ITAT MUMBAI BENCH B IN ITA NO. 9390/ M/04 A.Y. 2001-02 HAS HELD AS FOLLOWS: THE AO WAS OF THE VIEW THAT FOR MANAGING SUCH A LAR GE PORTFOLIO CERTAINLY SOME MANAGERIAL AND ADMINISTRATIVE TIME A S WELL AS EXPENDITURE MUST HAVE BEEN DEVOTED BY THE ASSESSEE. MOREOVER, THIS ITEM OF INCOME WAS NOT ASSESSEES MAIN BUSINESS AND , THEREFORE, SAME COULD BE ASSESSED AS INCOME FROM OTHER SOURCES. ACC ORDINGLY, HE ESTIMATED 2% OF THIS INCOME AS EXPENDITURE AND ADDE D THE SAME U/S.14A OF THE ACT. ON APPEAL, LD. CIT(A) FOLLOWING THE ORDER OF HIS PR EDECESSOR RESTRICTED THE DISALLOWANCE TO 0.% OF THE INCOME. T HE MATTER HAD TRAVELED TO THE TRIBUNAL AND THE TRIBUNAL ESTIMATED THE EXPENDITURE AT 1% OF SUCH INCOME. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE MAY BE DECIDED IN THE LIGHT OF THE DECISION OF THE TRIBUNA L FOR THE A.Y. 1998- 99. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF T HE AO. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULLY, WE FIND THAT AN IDENTICAL ISSUE CAME UP FOR CONSIDERATION OF THE TR IBUNAL FOR THE A.Y. 1998-99 AND THE SAME WAS DECIDED BY THE TRIBUNAL VI DE PARA-6 WHICH IS AS UNDER : 6. GROUND NO.4 PERTAINS TO THE ISSUE OF DISALLOWAN CE OF EXPENDITURE OF RS.7,79,836/- BEING 0.5% OF GROSS IN TEREST EARNED ON TAX FREE BONDS AND CLAIMED AS EXEMPT UNDE R SECTION 10(15) OF THE I.T. ACT. THE AO DISALLOWED 2% OF THE EXPENDITURE WHEREAS THE CIT(A) RESTRICTED IT TO 0.5%. ON THE VE RY SAME ISSUE THE REVENUE IS ALSO IN APPEAL IN GROUND NO.3 OF THE REVENUES APPEAL. CONSIDERING THE NATURE OF THE AND THE ORDERS OF THE AUTHORITIES WE ARE OF THE OPINION THAT DISAL LOWANCE OF 1% WOULD MEET THE END OF JUSTICE. ASSESSEES GROUND AB OUT THE DISALLOWANCE OF 0.5% IS REJECTED. FOLLOWING THE ABOVE ORDER, WE HOLD THAT EXPENDITURE IN RESPECT OF INTEREST ON TAX FREE BONDS SHOULD BE ESTIMATED AT 1 % AND AO IS ITA NO. 2923/M/2010 5 DIRECTED TO MAKE DISALLOWANCE OF ONLY 1%. ACCORDING LY THIS GROUND IS PARTLY ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE ORDER, WE HOLD TH AT EXPENDITURE IN RESPECT OF INTEREST ON TAX FREE BONDS SHOULD BE EST IMATED AT 1% AND AO IS DIRECTED TO MAKE DISALLOWANCE OF ONLY 1%. ACCORDING LY THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. THE SECOND GROUND RAISED BY THE ASSESSEE READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN SUSTAINING THE AOS ACTION OF ADDING AN ADDITIONAL SUM OF RS. 1,20,17,380.0 BEING THE AMOUN T OF EXPENSE DISALLOWED BY HIM U/S. 14A TO THE BOOK PROFIT FOR T HE PURPOSE OF SEC. 115JB OF THE I.T. ACT, 1061 WHICH IS WRONG AND CONTR ARY TO THE PROVISIONS OF THE I.T. ACT, 1961 AND THE RULES MADE THEREUNDER. 11. THE AO HAD WORKED OUT THE BOOK PROFIT UNDER THE PROVISIONS OF SEC. 115JB OF THE ACT. WHILE DOING SO HE ADDED A SUM OF RS. 1,20,17,380/- WHICH REPRESENTS THE AMOUNT DISALLOWED UNDER THE PROVISIO NS OF SEC. 14A R.W.RULE 8D OF THE ACT . 12. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE. AS PER C LAUSE (F) OF EXPLANATION 1 TO SEC. 115JB THE BOOK PROFIT WAS REQ UIRED TO BE INCREASED BY THE AMOUNT OR AMOUNTS OF EXPENDITURE R ELATABLE TO INCOME TO WHICH SEC. 10 APPLIES. IN THE CASE UNDER CONSIDERATION, THE AO CORRECTLY INCREASED THE BOOK PROFIT BY THE AMOUNT OF EXPENDITURE RELATABLE TO EXEMPT DIVIDEND INCOME EARNED. THEREFORE THE AO WAS JUSTIFIED IN DOING SO AS PER PROVISIONS OF ACT. THIS GROUND OF APPEAL IS THEREFO RE DISMISSED. 13. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 14. WE HEARD BOTH THE PARTIES. IN THE PRESENT CASE THE AO HAS MADE AN ADDITION OF RS. 1,20,17,380/- ON ACCOUNT OF ALLEGED EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE COMPUTING BOOK PROFIT U/S . 115JB OF THE ACT. THE AOS ACTION HAS BEEN CONFIRMED BY THE CIT(A). BOTH THE AUTHORITIES ITA NO. 2923/M/2010 6 HAVE APPLIED RULE 8D OF THE I.T. RULES WHILE COMPUTI NG THE AMOUNT OF EXPENDITURE DISALLOWABLE U/S. 14A OF THE ACT. THE PROVISIONS OF RULE 8D ARE NOT APPLICABLE TO THE PRESENT ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, DISALLOWANCE OF EXPENDITURE BY APPLYING RULE 8D IS NOT JUSTIFIED. FURTHER, NO ACTUAL EXPENDITURE WAS DEBITED IN THE P ROFIT & LOSS ACCOUNT RELATING TO THE EARNING OF EXEMPT INCOME. THEREFOR E, THE PROVISIONS OF SEC. 14A CANNOT BE IMPORTED INTO WHILE COMPUTING THE BOO K PROFIT U/S. 115JB OF THE ACT INASMUCH AS CLAUSE (F) OF EXPLANATION TO SE C. 115JB REFERS TO THE AMOUNT DEBITED TO THE PROFIT & LOSS ACCOUNT WHICH C AN BE ADDED BACK TO THE BOOK PROFIT WHILE COMPUTING BOOK PROFIT U/S, 115JB OF THE ACT. IN THIS CONNECTION, RELIANCE CAN BE PLACED UPON THE DECISIO N OF ITAT DELHI BENCH IN THE CASE OF GOETZE (INDIA) LTD. VS CIT (2009) 32 SOT 101 (DEL) WHEREIN IT HAS BEEN HELD THAT PROVISIONS OF SUB-SEC. (2) & (3) OF SEC. 14A CANNOT BE IMPORTED INTO CLAUSE (F) OF THE EXPLANATION TO SEC. 115JA OF THE ACT. IN THIS VIEW OF THE MATTER, WE THEREFORE, DELETE THE DISALL OWANCE OF EXPENSES CONFIRMED BY THE CIT(A) WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. IN OTHER WORDS, NO ADDITION TO THE BOOK PROFIT SHALL BE MADE ON ACCOUNT OF ALLEGED EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE COMPUTING INCOME U/S. 115JB OF THE ACT. THUS, THIS GROUND IS DECIDE D IN FAVOUR OF THE ASSESSEE. 15. THE THIRD GROUND RAISED BY THE ASSESSEE READS A S FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE LD. AOS ACT ION OF CHARGING INCOME OF RS. 14,39,68,000/- RECEIVED ON ACCOUNT OF SHARE APPLICATION MONEY AND INTEREST INCOME AS INCOME FROM OTHER SOU RCES INSTEAD OF INCOME FROM BUSINESS AS OFFERED BY THE APPELLANT A ND THE REASONS ASSIGNED BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF THE I.T. AC T, 1961 AND RULES MADE THEREUNDER 16. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED TH AT THE AO ERRED IN TREATING THE INTEREST EARNED ON BANK DEPOSIT AS INC OME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME AS SHOWN BY THE ASSESSEE. ITA NO. 2923/M/2010 7 17. THE FACTS OF THE CASE WERE THAT THE ASSESSEE RE CEIVED INCOME OF RS. 8,36,000/- ON SHARE APPLICATION MONEY AND INTEREST INCOME OF RS. 14,31,32,000/- FROM BANK DEPOSITS. THE AO ASKED TH E ASSESSEE TO EXPLAIN AS TO WHY THESE INTEREST RECEIPTS SHOULD NOT BE TRE ATED AS INCOME FROM OTHER SOURCES. THE ASSESSEE ARGUED BEFORE THE AO THAT TH E INTEREST INCOME WAS EARNED IN THE NORMAL COURSE OF BUSINESS AND THEREFO RE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. 18. THE AO WAS NOT SATISFIED WITH THE ASSESSEES AR GUMENT. THE AO HELD THAT THE ASSESSEE WAS NOT ENGAGED IN THE MONEY LEND ING BUSINESS. THE INTEREST WAS EARNED BY WAY OF PARKING SURPLUS FUNDS IN THE BANKS AND WITH OTHER (FOR SHARE APPLICATION MONEY). THERE WAS NOT HING THAT THE ASSESSEE PRODUCED TO ESTABLISH THAT THE RECEIPTS WERE CHARGE ABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. IN THE FA CTS AND CIRCUMSTANCES, THE AO TREATED THE INTEREST INCOME AS INCOME FROM O THER SOURCES. 19. BEFORE THE LD. CIT(A) IT WAS SUBMITTED BY THE A SSESSEE AS FOLLOWS: THE APPELLANT IS AN EXCHANGE WHICH FORMS A PLATFOR M FOR ALLOWING LEGAL TRADING IN COMMODITIES. THE EXCHANGE WAS FORMED AND GOVERNED BY THE RULES OF GOVT. OF INDIA. THE APPELLANT HAD EARNED INTEREST ON BANK DEPOSITS AND SHARE APPLICATION MONEY AMOUNTING TO RS. 14,39,68,000/-. THE SAID INCOME WAS DECLARED AS BUSINESS INCOME WHICH THE AO HAD TREATED AS INCOME FROM OTHER SOURCES BEING INTEREST EARNED ON SURPLUS FUNDS. HOWEVER, AS PER TAX RATES IT DOES N OT MAKE ANY DIFFERENCE. HOWEVER THE ASSESSMENT OF INCOME UNDER ONE HEAD MAY BE ALLOWED TO BE SET OFF AGAINST THE LOSSES UND ER OTHER HEADS, FUR SUCH REASONS THE APPELLANT WAS PRESSING THAT THE INTEREST INCOME BE ASSESSED AS BUSINESS INCOME. THE RELIANCE WAS BEING PLACED UPON THE CIRCULAR OF THE CBDT WITH REGARDS TO WHERE A DEALING IN SHARE AND SECURI TIES WERE IN LARGE NUMBER, THE TENDENCY TO TREAT THE SAME WAS BU SINESS INCOME AS AGAINST SHORT TERM CAPITAL GAIN AS RETURN ED BY MOST OF THE ASSESSEE. ITA NO. 2923/M/2010 8 THE QUANTUM OF INTEREST EARNED BEING LARGE AMOUNT T HE SAME SHOULD BE TREATED AS BUSINESS INCOME IN VIEW OF THE CIRCULAR OF CBDT. 20. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPE LLANT HAS EARNED INTEREST INCOME OF RS. 8,36,000/- ON SHARE A PPLICATION MONEY AND RS. 14,31,32,000/- ON BANK DEPOSITS. THE RE WAS NO NEXUS BETWEEN THE INTEREST RECEIPTS AND APPELLANTS BUSINESS ACTIVITIES. THEREFORE, THE AO WAS JUSTIFIED IN ASS ESSING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. THIS GROUND OF APPEAL IS DISMISSED. 21. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE US. 22. THE ASSESSEE HAS EARNED INTEREST ON BANK DEPOSI T AND SHARE APPLICATION MONEY AMOUNTING TO RS. 14,39,68,000/-. THE SAID INCOME HAS DECLARED AS BUSINESS INCOME WHICH THE AO HAS TREATE D AS INCOME FROM OTHER SOURCES BEING INTEREST EARNED ON SURPLUS FUNDS. WE FIND THAT THE ASSESSEE WAS NOT ENGAGED IN MONEY LENDING BUSINESS AND THE I NTEREST WAS EARNED BY PARKING SURPLUS FUNDS IN BANKS AND WITH OTHER (SHA RE APPLICATION MONEY). HENCE THE SAME CANNOT BE CHARGEABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND CAN BE TREATED AS ONLY INCOME FROM OTHER SOURCES. HENCE WE CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS ISSUE. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST, 2011 SD/- SD/- (T.R. SOOD) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICI AL MEMBER MUMBAI, DATED 26 TH AUGUST, 2011 RJ ITA NO. 2923/M/2010 9 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2923/M/2010 10 DATE INITIALS 1. DRAFT DICTATED ON: 17 . 8 . 2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 19.08.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: