2015 (10) TMI 2058

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....llowing substantial questions of law:- "i) Whether the Hon'ble ITAT was right in facts and circumstances of the case in treating interest income as business income instead of income from other sources? ii) Whether the Hon'ble ITAT was right in law and facts in allowing the B/F loss to the tune of Rs. 17,50,833/- to be set off against the income which was not allowed by the AO?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is an individual. He filed his return of income on 18.10.2004 declaring income of Rs. 3,94,636/-. Assessment was finalized under section 143(3) of the Act on 29.9.2006 at a total income of Rs. 21,68,094/-. The income from interest w....

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....ounsel has intimated that the AO while framing the assessment order under section 143(3) for the assessment year 2005-06 has himself affirmed that the assessee was carrying on money lending business during the assessment year 2004-05 and earned an income of Rs. 18,18,134/- therefrom. The assessee also filed a copy of the assessment order for the assessment year 2005-06 which is placed on record. The following observations of the AO in paras 5 and 6 on pages 3 and 4 of the assessment order for the assessment year 2005-06 are reproduced for the sake of convenience: "The affairs of the assessee during the preceding and succeeding assessment years also need to be observed to reach a logical conclusion. As per information supplied by the asses....

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....ment year under consideration as income under the head 'Other sources' against the claim made by the appellant otherwise. In view of the above discussion and particularly taking into account the fact that the AO has already accepted in the assessment year 2005-06 that assessee was engaged in money lending activity, the claim of the appellant that the income earned during the relevant previous year from interest is the income from business and profession has to be accepted. This ground of appeal is therefore allowed." 5. The Tribunal affirmed the order of CIT(A) with the following observations:- "15. The first ground raised by the revenue in treating the income earned from money lending as business income, therefore, is identica....