M/s. Pioneer Builders, Hyderabad V. ACIT, Circle-6(1), Hyderabad

ITA 993/HYD/2012

• Counselvise Citation: 99322514 RSA 2012
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 18-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2012
• Court: TRIBUNAL
• Department Lawyers: T VENKAT REDDY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Rejection of books of accounts; Business income; Depreciation; Rule of consistency
• Section: 143(3); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 993/HYD/2012 ASSESSMENT YEAR: 2005-06 M/S. PIONEER BUILDERS, HYDERABAD [PAN: AACFP6794Q] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-6(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI T. VENKAT REDDY, DR DATE OF HEARING : 18-08-2015 DATE OF PRONOUNCEMENT : 18-09-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDERABAD DATED 22-03-2012 . ASSESSEE IS AGGRIEVED ON TWO ISSUES AND RAISED SEVEN GROUNDS. ON GROUND NOS. 1 & 7 BEING GENERAL IN NATURE THERE IS NO NEED OF ANY A DJUDICATION. 2. BRIEFLY STATED, ASSESSEE IS A FIRM AND IS IN THE BUSINESS OF EXECUTING CIVIL CONTRACT WORKS. FOR THE IMPUGNED A SSESSMENT YEAR, ASSESSEE FILED ITS RETURN OF INCOME ON 28-10-2005 D ECLARING INCOME OF RS. 3,95,59,686/-. ASSESSING OFFICER (AO) ON EXAMI NATION OF BOOKS NOTED THAT VARIOUS EXPENDITURE CLAIMS CANNOT BE VER IFIED. HE THEREFORE, PROPOSED TO ESTIMATE THE PROFITS AT 12.5% ON NET CO NTRACT RECEIPTS. AFTER I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 2 -: CONSIDERING ASSESSEES OBJECTIONS, CONSIDERING THE ESTIMATION OF PROFITS IN PAST YEARS, AO ESTIMATED THE PROFIT AT 12% ON CONTR ACT RECEIPT OF RS. 53.38 CRORES AND 2% ON SUB-CONTRACT WORK OF RS. 4.2 7 CRORES. FROM THE PROFITS SO ESTIMATED, THE AO FURTHER ALLOWED DEDUCT ION OF RS. 3,67,64,089/- TOWARDS DEPRECIATION. HE ALSO MADE C ERTAIN ADDITIONS U/S. 40(A)(3), 40(A)(IA) WHICH IS THE SUBJECT MATTE R OF APPEAL BEFORE THE CIT(A) WHO DISPOSED THE APPEAL VIDE ORDER DT. 07-12 -2009. WE ARE NOT CONCERNED WITH THE ADDITIONS MADE IN THE ORIGINAL A SSESSMENT IN THIS APPEAL. 3. LD. CIT EXERCISING OF THE POWERS CONFERRED U/S. 263 NOTICED THAT ALLOWANCE OF DEPRECIATION AFTER ESTIMATING THE INCO ME IS NOT IN ACCORDANCE WITH THE PRINCIPLES LAID DOWN BY THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT [232 ITR 776] THEREFORE, HE DIRECTED THE AO TO DISALLOW THE AMOUN T U/S. 263. WHILE EXAMINING THE ABOVE ASSESSMENT, LD.CIT ALSO ISSUED FURTHER SHOW CAUSE NOTICE PROPOSING TO REVISE VARIOUS OTHER MATTERS SU CH AS GROSS RECEIPTS AS PER TDS, GIVING WRONG CREDIT OF TDS AND ALSO DIR ECTION TO ASSESS THE INTEREST RECEIVED FROM THE BANK DEPOSITS AS INCOME FROM OTHER SOURCES. THE ORDER U/S. 263 WAS THE SUBJECT MATTER OF APPEAL AND ITAT IN ITA NO. 526/HYD/2010 DT. 20-12-2012 UPHELD THE ACTION OF TH E CIT IN INVOKING THE JURISDICTION U/S. 263. AO CONSEQUENT TO SETTIN G ASIDE THE ORDER BY THE LD.CIT, COMPLETED THE RE-ASSESSMENT PROCEEDINGS WHEREIN HE HAS ESTIMATED THE 12% INCOME ON THE ORIGINAL GROSS RECE IPTS AND DENIED THE DEPRECIATION AS CONSIDERED BY LD.CIT. ASSESSEE OBJ ECTED BEFORE THE AO AND RELIED ON VARIOUS CASE LAW. HOWEVER, AO FOLLOW ING THE JURISDICTIONAL HIGH COURT ORDER(SUPRA) HELD THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED AND INCOME WAS ESTIMATED, NO DEDUCTION CAN BE ALLOW ED U/S. 30 TO 40D OF THE ACT. BY FOLLOWING THE DECISION OF JURISDICT IONAL HIGH COURT, THE CLAIM OF DEPRECIATION WAS DISALLOWED. APART FROM T HAT, AO BROUGHT TO TAX AN AMOUNT OF RS. 17,87,295/- RECEIVED ON TERM DEPOS ITS AS INCOME FROM OTHER SOURCES. IT WAS THE CONTENTION OF ASSE SSEE THAT INTEREST I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 3 -: RECEIVED WAS PART OF THE BUSINESS RECEIPTS AND ASSE SSEE HAS PAID INTEREST TO AN EXTENT OF RS. 64,61,803/- AND ONLY NET AMOUNT OF RS. 46,74,507/- WAS CLAIMED AS EXPENDITURE IN THE BOOKS OF ACCOUNTS . AO DID NOT AGREE WITH THE ABOVE CONTENTIONS AND STATED THAT SINCE BO OKS OF ACCOUNTS ARE REJECTED AND PROFIT ESTIMATED, THE INTEREST IS DEEM ED TO HAVE BEEN ALLOWED. THEREFORE, THE INTEREST ON DEPOSITS IS TO BE CONSIDERED AS INCOME FROM OTHER SOURCES. 4. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DECIDED THE ISSUE AS UN DER ON THE TWO ISSUES: I. ON THE ISSUE OF DENIAL OF DEPRECIATION: 6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. UNDISPUTEDLY THE APP ELLANT HAD NOT CONTESTED THE ESTIMATION OF PROFITS MADE IN THE ORI GINAL ASSESSMENT PROCEEDINGS AT THE RATE OF 12%, NOR DID IT HESITATE THE REJECTION OF ITS BOOKS OF ACCOUNTS. EVEN IF THE APPELLANT DID NOT C ONTEST THE ABOVE ESTIMATION IN ITS APPEAL ON ACCOUNT OF THE ALLOWANC E OF DEPRECIATION IN THE ORIGINAL ASSESSMENT ORDER, THERE IS NOTHING IN THE ASSESSMENT ORDER TO SUGGEST THAT THE ESTIMATION WAS @ 12% SUBJ ECT TO THE ALLOWANCE OF DEPRECIATION. ON THE OTHER HAND, IT I S SEEN THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF IN DWELL CONSTRUCTIONS [232 ITR 776] HAVE CATEGORICALLY HELD THAT NO DEDUCTION CAN BE ALLOWED U/S. 32 TO 40 D OF THE ACT AFTER REJECTION OF BOOKS OF ACCOUNTS. THERE IS NOTHING ON RECORD A S CAN DEMONSTRATE THAT THE ESTIMATION MADE @ 12% WITHOUT CONSIDERING ANY FURTHER DEDUCTIONS, INCLUDING DEPRECIATION, WAS NOT JUSTIFIABLE IN THE CASE OF THE PRESENT APPELLANT. THE GROUNDS TAK EN BY THE APPELLANT IN FURTHER APPEALS ALSO DO NOT INDICATE T HAT THE RATE OF 12% WAS NOT CONTESTED ONLY BECAUSE DEPRECIATION WAS SO ALLOWED IN THE ORIGINAL ASSESSMENT ORDER. THE ALLOWANCE OF DEPREC IATION, HOWEVER, IS INDEED NOT CONSISTENCE WITH THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT. AS REGARDS THE RELIANCE OF THE REPRESENTATIVE OF THE APPELLANT ON THE DECISION IN THE CASE OF CIT VS. GIAN CHAND LABOUR CONTRACTORS [316 ITR 127] (SUPRA) AND CIT VS. JAIN CONSTRUCTION CO. [245 ITR 527] (RAJASTHAN) (SU PRA). FINDING NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER, T HEREFORE, THE DISALLOWANCE OF DEPRECIATION OF RS. 3,67,64,089/- A FTER REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF PROFITS @ 12% I S UPHELD. I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 4 -: II. ON THE ISSUE OF ASSESSING INTEREST INCOME: 9. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE INTEREST OF RS. 17,87,295/- WAS RECEIVED ON TERM DEPOSITS WITH BA NK OF BARODA AND UCO BANK. EVEN THOUGH THE APPELLANT HAD PAID I NTEREST OF RS. 64,61,803/-, THE SAME WAS ONLY PAID AS A BUSINESS E XPENDITURE AND SO CONSIDERED IN THE ESTIMATION OF INCOME @ 12% OF REJECTION OF BOOKS OF ACCOUNTS. THE RECEIPT OF INTEREST OF RS. 17,87,295/- HOWEVER, HAS NOT BEEN SHOWN AS EARNED ON ACCOUNT OF ANY DEPOSITS KEPT WITH THE BANKS FOR THE PURPOSE OF BUSINESS SO AS TO BE NETTED OFF AGAINST THE INTEREST PAID. ACCORDINGLY, FINDIN G NO INFIRMITY IN CONSIDERING SUCH INTEREST AS INCOME FROM OTHER SOUR CES AND MAKING THE ADDITION OF RS. 17,87,295/- ON THIS ACCOUNT, GR OUND NO.4 IS DECIDED AGAINST THE APPELLANT. 5. CONTESTING THE ABOVE TWO ISSUES, LD. COUNSEL SUB MITTED THAT DEPRECIATION WAS ALLOWED IN EARLIER YEARS, EVEN AFT ER ESTIMATION OF INCOME AT 12% AND ON FACTS, DEPRECATION WAS ALLOWABLE ON T HE PRINCIPLE OF CONSISTENCY. FURTHER, LD. COUNSEL ALSO PLACED ON RE CORD THE JURISDICTIONAL HIGH COURTS ORDER IN THE CASE OF CI T VS. Y. RAMACHANDRA REDDY IN ITTA NO. 48/2002 DT. 30-07-2014, WHEREIN, INDWELL CONSTRUCTIONS WAS DISTINGUISHED. WITH REFERENCE TO THE TREATMENT OF INTEREST FROM FIXED DEPOSITS AS INCOME FROM OTHER SOURCES IT WAS THE SUBMISSION OF ASSESSEES COUNSEL THAT THESE DEPOSIT S ARE MADE FOR THE PURPOSE OF BANK GUARANTEE WAY BACK IN 1999 AND ALL THESE YEARS, THE INCOME CONSIDERED WAS BUSINESS RECEIPT ONLY. THE REFORE, THE ACTION OF AO AND CIT(A) IS NOT BASED ON THE FACTS. 6. LD. DR HOWEVER, SUPPORTED THE ORDER OF AO AND CI T(A) ON THE FACTS OF THE CASE. 7. WE HAVE CONSIDERED THE ISSUES AND EXAMINED THE C ONTENTIONS. AS FAR AS THE CLAIM OF DEPRECIATION IS CONCERNED, IT I S BASICALLY ONE OF THE FACTUAL ISSUES. AS NOTED EARLIER, AO ESTIMATED THE INCOME AT 12% AND THEREAFTER, ALLOWED THE DEPRECIATION. THIS ACTION OF THE AO MAY BE IN TUNE WITH THE ORDER OF THE HONBLE HIGH COURT IN TH E CASE OF CIT VS. Y. I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 5 -: RAMACHANDRA REDDY IN ITTA NO. 48/2002 DT. 30-07-201 4 (SUPRA), SUBSEQUENTLY PRONOUNCED. IN THE CASE OF ESTIMATION OF INCOME, AO, DO TAKE VARIOUS STANDS, LIKE ESTIMATING THE NET PROFIT FROM BUSINESS, ESTIMATING THE PROFIT AND ALLOWING DEPRECIATION AND ALSO ESTIMATING PROFIT AND ALLOWING DEPRECIATION AND INTEREST, DEPENDING O N THE NATURE OF WORK, MACHINERY USED AND FUNDS PROVIDED ETC. THERE IS NO HARD AND FAST RULE THAT IN ALL CASES, ESTIMATION OF INCOME SHOULD BE I N A PARTICULAR METHOD. SINCE VARIOUS CLAIMS ARE MADE BY ASSESSEES CONSIDE RING THOSE CLAIMS AND FACTS IN SIMILAR CASES, ESTIMATION OF INCOME W AS BEING RESORTED TO. EVEN APPELLATE AUTHORITIES TAKE JUDICIOUS VIEW, DEP ENDING ON THE FACTS OF THE CASE. IN THIS CASE, ASSESSEE HAS ACCEPTED THE REJECTION OF BOOKS OF ACCOUNTS AND ALLOWANCE OF DEPRECIATION AFTER PROFIT WAS ESTIMATED BY THE AO IN THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT. THERE IS NO CLAIM OF INTEREST SEPARATELY MADE. THUS, TO THE EXTENT OF E STIMATION OF INCOME AT 12%, THE MATTER WAS CONCLUDED. THE ALLOWANCE OF DE PRECIATION ALSO WOULD NOT HAVE BEEN AN ISSUE, BUT FOR THE PROCEEDIN GS OF THE CIT U/S. 263. THE CIT WAS OF THE OPINION THAT AO HAS ERRED IN ALLOWING DEPRECIATION AFTER ESTIMATION OF INCOME IN VIOLATIO N OF PRINCIPLES LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE O F INDWELL CONSTRUCTIONS VS. CIT [232 ITR 776] (SUPRA). THERE IS NO DISPUTE WITH REFERENCE TO THE PRINCIPLES LAID DOWN BY THE HONBL E JURISDICTIONAL HIGH COURT GOVERNING AT THAT POINT OF TIME. BASED ON TH E SAME, ITAT ALSO HAS UPHELD THE PROCEEDINGS U/S. 263. WHILE UPHOLDING T HE CO-ORDINATE BENCH HAS OPINED AS UNDER: 13. UNDISPUTEDLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER S.143(3) OF THE ACT BY ESTIMATING PROFIT AT 12% ON THE CONTRACT RECEIPTS AFTER REJECTING THE BOOKS OF ACCOUNT. FROM THE PROFIT SO ESTIMATED, THE ASSESSING OFFICER ALLOWED FURTHER DEDUCTION OF DEPRECIATION. THE COMMISSIONER OF INCOME-TAX HEL D THE ALLOWANCE OF DEPRECIATION AFTER ESTIMATING PROFIT TO BE CONTR ARY TO THE LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE O F INDWELL CONSTRUCTIONS (SUPRA). IN THE AFORESAID CASE, THE JURISDICTIONAL HIGH COURT HAS HELD THAT WHEN THE BOOKS OF ACCOUNT ARE R EJECTED AND PROFIT IS ESTIMATED, IT HAS TO BE PRESUMED THAT THE INCOME HAS BEEN COMPUTED AFTER GIVING EFFECT TO THE PROVISIONS CONT AINED UNDER S.30 I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 6 -: TO 43D OF THE ACT. THUS, THE RATIO LAID DOWN BY TH E HONBLE HIGH COURT WOULD EFFECTIVELY MEAN THAT ONCE PROFIT IS ES TIMATED, AFTER REJECTING THE BOOKS OF ACCOUNT, NO FURTHER DEDUCTIO N TOWARDS DEPRECIATION CAN BE ALLOWED. THE HYDERABAD BENCHES OF THE INCOME-TAX APPELLATE TRIBUNAL, IN SIMILAR CASES HAV E BEEN CONSISTENTLY HOLDING, AS IN ACIT V/S. M/S. TEJA CON STRUCTIONS (ITA NO.1191/HYD/2011) DATED 17.2.2012,THAT WHILE ESTIMA TING PROFIT AFTER REJECTING THE BOOKS OF ACCOUNT IN THE CASE OF WORKS CONTRACTORS, NO FURTHER DEDUCTION TOWARDS DEPRECIATION IS ALLOWA BLE. NON- CONSIDERATION OF THE DECISION OF THE JURISDICTIONAL HIGH COURT AS WELL AS THE ORDERS OF THE ITAT ON THE ISSUE HAS CERTAINL Y RENDERED THE ASSESSMENT ORDER IN THE PRESENT CASE, ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. THOUGH W E FULLY AGREE WITH THE CONTENTION OF THE LEARNED AUTHORISED REPRESENT ATIVE FOR THE ASSESSEE AND THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF UCO BANK V/S. CIT (SUPRA) WITH REGARD TO THE BINDIN G NATURE OF THE CIRCULAR ON THE STATUTORY AUTHORITIES, AT THE SAME TIME, THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE A SSESSEE THAT THE ASSESSING OFFICER COMMITTED NO ERROR IN FOLLOWING THE CBDT CIRCULAR IN PREFERENCE OVER THE DECISION OF THE JURISDICTION AL HIGH COURT IS FALLACIOUS. THE HONBLE APEX COURT IN THE CASE OF H INDUSTAN AERONAUTICS LTD. V/S. CIT (243 ITR 808) WHILE DEAL ING WITH IDENTICAL ISSUE HAS HELD THAT IF THE CIRCULAR ISSU ED BY THE CBDT IS CONTRARY TO THE DECISION OF THE HIGH COURT, THEN TH E DECISION OF THE HIGH COURT WILL BE BINDING. FOLLOWING THE AFORESAID DECISION OF THE HONBLE APEX COURT, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BHARTIA INDUSTRIES LTD V/S. CIT(243 CTR 328) HAS AL SO HELD THAT IF THERE IS DIFFERENCE BETWEEN THE DECISION OF THE HIG H COURT AND THE CIRCULAR OF THE CBDT, THEN THE DECISION OF THE HIGH COURT WILL BE BINDING ON THE STATUTORY AUTHORITIES. 8. THEREFORE, TO THE EXTENT OF ACTION OF CIT IN COM ING TO THE CONCLUSION THAT ALLOWANCE OF DEPRECIATION IS AN ERR OR COMMITTED BY THE AO STANDS APPROVED BY THE ITAT. WE ARE NOT INFORME D WHETHER ASSESSEE HAS CHALLENGED THE ORDER OF THE ITAT BEFORE THE HON BLE HIGH COURT. IF THAT IS NOT CHALLENGED, THEN THE MATTERS GETS CONCL UDED. IN VIEW OF THAT, CONSEQUENTIAL ORDER OF THE AO DENYING THE ALLOWANCE OF DEPRECIATION HAS TO BE UPHELD, AS THIS FORUM CANNOT DEVIATE FROM THE OPINION EXPRESSED BY THE CO-ORDINATE BENCH IN THIS CASE EARLIER. THEREF ORE, TO THAT EXTENT, ASSESSEES GROUNDS CANNOT BE ALLOWED. I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 7 -: 9. IN CASE, THE ORDER OF THE ITAT WAS CHALLENGED BY ASSESSEE, THEN ASSESSEE CAN TAKE SUPPORT FROM THE SUBSEQUENT JUDGM ENT OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. Y. RAMACHANDRA RE DDY IN ITTA NO. 48/2002 DT. 30-07-2014 (SUPRA), TO CONTEST THAT ACT ION OF THE CIT IS NOT ACCORDING TO THE JUDGMENT OF THE JURISDICTIONAL HIG H COURT. ONLY IN THAT EVENT, ASSESSEE CAN GET RELIEF ON THE CLAIM OF DEPR ECIATION. WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OR DEMERITS OF THE CASE. SINCE THE ORDER OF CIT ON 263 FOR DISALLOWANCE OF THE DEPRECI ATION WAS UPHELD ON THE BASIS OF THE LAW THEN EXISTING BY THE CO-ORDINA TE BENCH, WE CANNOT DEVIATE FROM THE DIRECTIONS ALREADY ISSUED OR OPINI ON ALREADY EXPRESSED IN THAT ORDER. FOR THE TIME BEING, WE CAN NOT DIFFE R FROM COORDINATE BENCH DECISION IN ASSESSEE OWN CASE IN THIS VERY AS SESSMENT YEAR, TILL IT IS REVERSED BY HIGHER FORUM. THEREFORE, THE GROUND S RAISED BY ASSESSEE ARE REJECTED. 10. COMING TO THE ISSUE OF ASSESSMENT OF INTEREST I NCOME UNDER THE HEAD OTHER SOURCES, THERE IS MERIT IN ASSESSEES CONTENTIONS. AS PER THE PAPER BOOK FILED BEFORE US, THE DEPOSITS ARE MA DE LONG BACK FOR BANK GUARANTEE. THERE ARE JUDICIAL PRINCIPLES THAT INTE REST RECEIVED ON BANK GUARANTEES IN THE COURSE OF BUSINESS IS ALSO BUSINE SS INCOME AND NOT INCOME FROM OTHER SOURCES, AS NO SURPLUS FUNDS AR E PLACED FOR INVESTMENT PURPOSES. IT SEEMS, AO HAS NOT EXAMINED THIS ISSUE. THEREFORE, WITHOUT EXPRESSING ANY OPINION ON THE ME RITS OR DE-MERITS OF THE ACTION, WE ARE OF THE OPINION THAT THE ISSUE RE QUIRES RE-EXAMINATION BY THE AO. IN CASE FIXED DEPOSITS WERE MADE FOR THE PURPOSES OF THE BANK GUARANTEE, LONG BACK BY ASSESSEE IN THE COURSE OF BUSINESS, THEN THE INTEREST INCOME HAS TO BE TREATED AS BUSINESS INCOME. IN THE EVENT, ASSESSEE MADE FIXED DEPOSITS OUT OF SURPLUS FUNDS A ND NOT CONNECTED WITH BUSINESS ACTIVITY, THEN THE INTEREST INCOME RE CEIVED WOULD BE IN THE NATURE OF INCOME FROM OTHER SOURCES. IT IS THE C ONTENTION OF ASSESSEE THAT THESE FACTS ARE NOT EXAMINED. THEREFORE, IN T HE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE AO AND CIT(A) ON THIS ISSUE AND RESTORE THE I.T.A. NO. 993/HYD/2012 M/S. PIONEER BUILDERS :- 8 -: MATTER TO AO TO EXAMINE THE NATURE OF DEPOSITS AND THE NATURE OF INTEREST RECEIVED. ASSESSEE SHOULD BE GIVEN DUE OP PORTUNITY AND ASSESSEE SHOULD ALSO FURNISH NECESSARY EVIDENCES IN SUPPORT OF ITS CLAIM. WITH THESE DIRECTIONS/OBSERVATIONS, THE GROUNDS REL ATED TO THIS ISSUE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH SEPTEMBER, 2015 TNMM COPY TO : 1. M/S. PIONEER BUILDERS, 8-2-309/M/5, NAVODAYA COL ONY, ROAD NO. 14, BANJARA HILLS, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-6(1), IT TOWERS, AC GUARDS, HYDERABAD. 3. CIT (APPEALS)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.