2015 (10) TMI 378

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....see firm had shown interest from bank FDRs and others at Rs. 5,87,58,434/-. The assessee had also claimed remuneration to partners for Rs. 7,68,45,920/-. The remuneration to partners was determined as per the book profit shown in profit and loss account including interest from bank FDRs and income from other sources. The learned Assessing Officer gave reasonable opportunity of being heard on book profit claimed by the assessee for remuneration purposes, which was availed by the assessee. After considering the assessee's reply, the learned Assessing Officer has not convenience with the submission made by the appellant, it has been held by the Assessing Officer that income from bank FDRs had been shown by the appellant as a business incom....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ions:     i. Madhya Pradesh State Industries Corporation Limited Vs. CIT (1968) 69 ITR 824 (MP)     ii. Shamas Tabrez Vanti (In Re) (2005) 273 ITR 299 the Authority of Advance Ruling.     iii. Murli Investment Company Vs. CIT, 167 ITR 368 (Raj.).     iv. CIT Vs. Rajasthan Land Development Corporation 211 ITR 597 (Raj.).     v. CIT Vs. Monarch Tools Pvt. Ltd. (2002) 260 ITR 258. The Assessing Officer further observed that the appeal for A.Ys. 2002-03, 2003-04 and 2004-05 had been decided by the Hon'ble ITAT in favour of the assessee on this ground of appeal. In A.Ys. 2005-06 and 2006-07, the appellant had filed M.A. before the Hon'ble ITAT, w....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....bsp;      The Hon'ble ITAT following its decision in the case of S.P. Equipment 33 DTR 265 (Jp.) directed the A.O. to compute the book profit including the interest income on FDR etc. as claimed and the disallowance under section 40(b) of the Act was directed to be deleted." 4. Now the Revenue is in appeal before us. 5. The learned CIT D.R. vehemently supported the order of the Assessing Officer and argued that interest on FDRs does not part of business income, defined in Section 40b(v)(1) of the Act. Particularly he drawn our attention on definition of book profit in Explanation-3 of Section 40b(v)(1) of the Act wherein how to compute book profit has been defined i.e. "book profit means the net profit, ha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....'ble ITAT has considered various decisions on this issue, which is reproduced for sake for convenience:     i. ACIT Vs. Seth Brothers (2006) 99 TTJ 189 (Rajkot).     ii. Honda Cell Power Product Ltd. Vs. CIT (2007), 295 ITR 466 (SC).     iii. S.P. Equipment & Services Vs. ACIT (2010) 33 DTR 265 (Jp) (Trib)     iv. CIT Vs. Hycron India Ltd. (2008) 308 ITR 251 (Raj). Therefore, the learned A.R. prayed to confirm the order of the learned CIT(A). 7. We have heard the rival contentions of both the parties and perused the material available on the record. It is fact that interest on FDRs comes under the head "income from other sources" and never has been part of boo....