AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1239
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.... officer to treat the interest income of Rs. 8,36,30,107/-, being interest eared on fixed deposits as 'Business Income' instead of 'Income from Other Sources'." ITA No.1544/M/2021 for A.Y. 2009-10 "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A), was correct in allowing the business loss of Rs. 62,55,068/- claimed on account of depreciation and amortization of amalgamation expenses, which was capitalized to work-in-progress because the assessee had only one contract and therefore, entire expenses including depreciation were liable to be capitalized as work in progress. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in directing the assessing officer to treat the interest income of Rs. 7,44,58,749/-, being interest earned on fixed deposits as 'Business Income ' instead of 'Income from Other Sources'." ITA No.1543/M/2021 for A.Y. 2013-14 "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A), was correct in allowing the business loss of Rs. 1,38,38,226/- claimed on account of depreciation, which was capitali....
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.... none appeared on behalf of it, so the Bench decided to decide these appeals on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue. 7. We have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. Ground No.1 of ITA No.1545/M/2021 for A.Y. 2008-09: Ground No.2 of ITA No.1544/17 for A.Y. 2009-10: Ground No.2 of ITA No.1543 for A.Y 2013-14: 8. The Ld. CIT(A) allowed to treat the interest income earned by the assessee during the years under consideration as "business income" instead of "income from other sources" by returning the identical findings in all the aforesaid appeals except difference in figures of interest earned by returning the following findings: "11.0 I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. The Ground no. 2 deals with treatment of interest income earned on fixed deposits of Rs. 8,36,30....
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....a High Court in the case of "Swish Chandra & Co. vs. CIT" 234 ITR 70 (KAR) (and decision of Hon'ble Bombay High Court in the case of "CIT Vs. Lok Holdings" 308 ITR 356 (Bom.) and has contended that the said decisions are fully applicable on the facts of this case. The Ld. DR on the other hand has relied upon the findings of the lower authorities. 10. We find that in the facts and circumstances of the case in hand, the decision of Hon'ble Bombay High Court in the case of "CIT vs. Lok Holdings" (supra) is squarely applicable. In that case the assessee was engaged in development of properties. Advance from customers intending to purchase flats was deposited with the banks in the course of business. The interest income was held to be assessable as business income and not as income from other sources. Following the decision of Hon'ble Bombay High Court in the case of "Lok Holdings" (Supra) the interest income earned from temporary deposits pending their utilization out of customer advances on the booking of flats related to the project of the assessee is assessable as business income. The A.O. is accordingly directed to assess the same as business income. This groun....
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....ng evidence has been found against the assessee which conveys overall fixed deposits interest income should be treated under the head "other sources". Therefore in view of settled legal position, the AO could not have disturbed the already concluded position, in the proceedings u/s 153G. Therefore on this account also addition is not warranted against the assessee in respect of interest income as income under the head "other sources". 11.6 Consequently the ground no. 2 taken by the assessee is allowed." 9. We have perused the findings returned by the Ld. CIT(A) who has decided the issue in favour of the assessee by following the order passed by the Tribunal in assessee's group company cases passed in ITA No.4579/M/2013 dated 03.12.2015, which are based upon the decision rendered by Hon'ble Karnataka High Court in case of Swish Chandra & Co. vs. CIT 234 ITR 70 (KAR) and decision rendered by Hon'ble Bombay High Court in case of CIT Vs. Lok Holdings 308 ITR 356 (Bom.) 10. When it is settled principle of law that in cases where assessee is engaged in development of properties, advances taken by it from customer to purchase the flats was deposited with the banks in the co....
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.... Mumbai Bench in the case of Hiranandani Palace Garden Pvt Ltd vs ACIT (supra). It has also brought to our notice that same method of accounting has been consistently followed by the assessee in all the subsequent years. Once a particular method of accounting has been followed consistently and apparently the same is not contrary to law or facts of the case, then the AO is not permitted to disturb the same only because as per him the some other method of accounting should have been followed by the assessee. 22. Thus, taking into account all the facts and circumstances of the case, we find that action of the AO in treating the impugned expenses as part of WIP was not justified and was contrary to law and facts. The claim made by the assessee is in line with the method of accounting consistently followed by the assessee and is in accordance with law and facts of this case. Therefore, addition made by the AO is directed to be deleted. 23. The AO is directed to allow the expenses as have been claimed by the assessee. The consequential effect shall also be given by the AO while passing order giving appeal effect for the amount of closing WIP of the year under considerat....