TaxTMI 
TaxTMI 
2026 (1) TMI 679
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....es. 2. The learned CIT(A) failed to follow the principles of consistency, where the Assessee has been offering the Interest Income under the head 'Income from Other Sources' and the same has been duly accepted in all preceding years. 3. The learned CIT(A) erred in treating the Assessee as moneylender and failed to take into consideration that the borrowed loans have been utilized mainly for the purposes of giving loans to its 26 related parties who are family members and family concerns. Ground No. 2: Disallowance of Rs. 3,79,06,957/-u/s. 40(a)(ia) 4. Without prejudice to what is stated above, the learned CIT(A) erred in making disallowance u/s. 40(a)(ia) of Rs. 3,79,06,957/- (being 30% of the Interest paid of Rs. 13,23,56,523/-) on the ground that the deduction u/s. 194A has not been complied with. 5. Non-Applicability of TDS provisions: (i) The learned CIT(A) failed to take into consideration that as per the Proviso to section 194A, the Assessee is not required to deduct any TDS u/s. 194A for AY. 2016-17, since the total sales/gross receipts from business of profession, in the financial year immediately preceding the financial....
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.... 3. All the grounds of appeal are connected with the main grievance regarding the treatment given by the AO to the main income earned on interest as Business income which the assessee treated as Income from Other Sources. Rest of the grounds are inextricably linked to above finding of the AO. Therefore, all the grounds of appeal are being considered together. 4. Facts of the case are that the assessee HUF declared income of Rs 5,51,840/-, mainly comprising of Interest income disclosed under the head 'Income from Other Sources'. The AO after examining the facts of the case opined that the assessee was into the business of Finance provider akin to a moneylender considering the facts that it was engaged in this activity exclusively as apparent from the fact that it lent money to various parties on which it earned interest income. For the purposes of giving loan, it made borrowing from the private sources. Unsecured Loan taken as on 31.03.2016 was Rs 115.17 cr. and Loan given amounted to Rs 114.17 cr. It was also noted that, it paid interest and brokerage of Rs 15.11cr. in aggregate comprising of interest of Rs 14.87 cr. and Rs 24,53,510/-as brokerage. 4.1 It was also observed t....
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....it is held that interest income be assessed under the head income from Other Sources. 5.1 The ld.CIT(A) observed that on perusal of the return of income, computation of total income and the financial statements for the year ended on 31.03.2016 that the assessee earned interest income by borrowing loans which amounted to Rs. 115,71,22,466/- from 379 parties claiming it be its sole activity carried out during the impugned assessment year. The loans given amounted to Rs. 114,17,14,742/-. It claimed expenses on account of interest paid and brokerage paid for identifying loan lenders from the market. An analysis of the above demonstrated that the activity of the assessee had main features of business activity. The activity of borrowing loans and lending loans implies real, substantial and systematic organized course of activity with a profit motive. Interest, generated from such an activity, was business Income. He also noted that the interest income being subject to tax under the head income from Other Sources in the preceding assessment years, the same should be assessed to tax as income from Other Sources in the impugned assessment year as the principle of res-judicata is not appl....
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.... deduct the tax at source arises only when Tax audit is carried out by the assessee in the second year and subsequent years. The appellant, in view of past practice could not have anticipated that in the assessment proceedings of A.Y.2016-17, the AO would take a different view and violate the principle of consistency. Hence, it was under no obligation to either carry out tax audit or deduct the TDS under the law. 5.5 The ld.CIT(A) noted that as per the financial statements of Financial Year 2014-15, immediately preceding the Financial Year 2015-16, the gross receipts of interest was Rs. 7,36,10,235/-. Hence, the above proviso to section 194A was not applicable to the case of assessee since the gross receipts in the Financial Year 2014-15, was more than Rs. 1 cr. As stipulated in section 44AB of the Act. Therefore, in the given facts and circumstances with reference to section 194A and 44AB of the Act, the assessee could not take shelter of the above proviso for non-deduction of tax on the interest payments which exceeded Rs. 1 cr. made in the instant assessment year. Taking into consideration the entire facts of the case, he concurred with the stand taken by the AO that the prov....
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....nture in the nature of trade, commerce or manufacture. Business, trade and commerce refer to buying and selling of goods or services for profit and other incidental activities. Thus, business is any activity carried out with the intention to earn profit, whether such an activity is continuous or temporary is immaterial. In considering the question whether the activity was a business activity or not, would depend upon the dominant intention of the assessee and the actual activity carried on by the assessee as held by the hon'ble Madra High Court in the case of Mrs. Kamala Muthia vs. CIT (2003) 175 Taxation 581 (Mad.). According to the 'Shorter Oxford Dictionary', "business" includes a state occupation, profession or trade; profession in a wide sense means any calling or occupation by which a person habitually earns his living. Even so, "trade" is explained as the practice of some occupation, business or profession habitually carried on. The hon'ble Supreme Court in Narain Swadeshi Weaving Mills vs. Commissioner of Excess Profits Tax (1954) 26 ITR 765 (SC), said that the word "business" connotes some real, substantial and systematic or organised course of activity or conduct with a s....