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Facts
The assessee sought partial recall of an earlier order concerning the taxability of interest and miscellaneous income. The assessee argued that in a previous Assessment Year (2015-16), ITAT had held this income to be business income, not income from other sources, which was overlooked in the original order.
Held
The Tribunal recalled its earlier order on the limited issue of taxability of interest and miscellaneous income. Following its own precedent for the preceding year (A.Y. 2015-16), the Tribunal held that such income is to be taxed as 'income from business and profession' and not 'income from other sources'.
Key Issues
Whether interest and miscellaneous income earned by the assessee should be treated as business income or income from other sources, considering previous ITAT decisions.
Sections Cited
147, 148, 143(3)
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has come before us on account of partial recall of original order in ITA No. 414/Ahd/2021 dated 29.02.2024 which was partially recalled in M.A. No. 114/Ahd/2024 vide order dated 03.01.2025 on the limited issue of taxability of “interest income” and “miscellaneous income”. Against the original order dated 29.02.2024, the assessee had filed Miscellaneous Application seeking partial recall of the order on the ground that in the earlier assessment year (A.Y. 2015-16), ITAT Ahmedabad in assessee’s own case had held that “interest income” and “miscellaneous income” earned by the assessee is liable to be taxed under the head “income from business and profession” and “income from other sources”. However, the Tribunal vide order dated 29.02.204 had incorrectly allowed the appeal of the Department on this issue and had held Asst.Year –2016-17 - 2– that such income constitutes “income from other sources”. Accordingly, in M.A. No. 114/Ahd/2024, the ITAT Ahmedabad recalled the earlier / original order passed by ITAT Ahmedabad with the following observations:
“Vide the present Miscellaneous Application, the assessee has sought partial recall of order dated 29.02.2024 on the ground that during the course of hearing the assessee had relied on order passed by the ITAT Ahmedabad Coordinate Bench in assessee’s own case for A.Y. 2015-16 i.e. the immediately preceding year in ITA No. 569/Ahd/2019 in which it was held that interest income and miscellaneous income earned by the assessee is liable to be taxed under the head “income from business and profession” instead of “income from other sources”. However, the Tribunal in it’s order dated 29.02.2024 allowed the appeal of the Department without taking into consideration the aforesaid contention of the Counsel for the assessee, which constitutes a mistake apparent from record.
On going through the facts of the instant case, we are hereby recalling the order of ITAT in ITA No. 414/Ahd/2020 vide order dated 29.02.2024 to the limited extent with regard to taxability of interest income and miscellaneous income which we observe was not adjudicated by the ITAT in the above order.”
Now the solitary issue before us is with regards to taxability of “interest income” and “miscellaneous income” earned by the assessee and whether the same is liable to be taxed as “business income” or “income from other sources”. Before us, the Counsel for the assessee submitted that the ITAT Ahmedabad in assessee’s own case for A.Y. 2015-16 i.e. in the immediately preceding year, in ITA No. 569/Ahd/2019 held that interest income and miscellaneous income earned by the assessee is liable to be taxed under the head “income from business and profession” instead of “income from other sources”. Copy of the order was placed before us for our records. Asst.Year –2016-17 - 3–
It would be useful to reproduce the relevant extracts of the order passed by ITAT in assessee’s own case for A.Y. 2015-16 wherein the ITAT held that such income is liable to be taxed as “income from business and profession”. The relevant extract of the order passed by ITAT are reproduced below for ready reference:
“19. We have perused the order passed by the Co-ordinate Bench in ITA Nos.281 & 282/Ahd/2018 & 323 & 324/Ahd/2018 in assessee’s own case, wherein issue has been discussed and decided in favour of the assessee upon deleting the addition made by the Ld. AO. The relevant portion whereof is as follows:
“15. Ground No. 4 namely treatment of interest income of Rs. 62.67 lacs and miscellaneous income of Rs. 270.83 lacs as “business income” instead of “income from other sources”. The Ld. Counsel submitted that his issue is also covered against the Revenue’s appeal before the High Court of Gujarat in Tax Appeal No. 63 of 2020 wherein it was held as follows: 13 With regard to question No.2[d], the Assessing Officer noticed that as per Schedule 14, the assessee has shown other income consisting of interest on loan and advances, incentives from CPSU, etc. The Assessing Officer was of the view that this income was to be assessed as income from other sources instead of business income shown by the assessee. 14 On appeal, the CIT(A) as well as the Tribunal held that the interest income is required to be treated as business income instead of income from other sources. The Tribunal in its order observed as under: “10 We have heard the rival contentions and perused the material on record on this issue. The assessing Officer has treated the aforesaid income under the head income from other sources without controverting the submission of the assessee on the basis of which it was claimed that these income were of the nature of business income as elaborated in para seven of this order. The ld. CIT(A) has decided the issue in favour of the assessees taking that this issue was decided in favour of the assessee for assessment year 2009-10. During the course of appellate proceedings, the Revenue has failed to controvert the aforesaid contention and the findings of the ld. ClT(A),therefore after considering the material fact that interest earned on loan and advances from deposit placed with Mega Power Project toward sits sharing of power and interest of UL pool account received from M/s. Power Grid Corporation India Ltd were directly related to the business of the assessee ,therefore, this ground of appeal of the Revenue stands dismissed.” Asst.Year –2016-17 - 4– 15 In view of above findings of acts arrived at by the Tribunal that interest earned by the assessee was directly related to the business of the assessee, no question of law much less substantial question of law arises. Therefore, appeal stands dismissed qua question No.2[d].
Respectfully following the Juri ictional High Court judgment which has confirmed Tribunal’s decision in assessee’s own case, we hereby held that the interest income and miscellaneous income earned by the assessee were directly related to the business of the assessee and assessable as “business income” only and not as “income from other sources”. Thus the Ground no. 4 raised by the Revenue is hereby rejected.”
We do not find any reason to interfere with the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO. This ground of appeal found to be devoid of any merit and thus dismissed.”
Accordingly, in view of Tribunal’s observation in assessee’s own case for A.Y. 2015-16, wherein it has been held that such income qualifies as “business income”, it is held that such “interest income” and “miscellaneous income” earned by the assessee is liable to be taxed under the head “income from business and profession” instead of “income from other sources”. Accordingly, on this issue the earlier order passed by the Tribunal (dated 29.02.2024) shall stand replaced with our above observations with regards to taxability of interest income, and miscellaneous income.
In the result, the appeal of the Department is dismissed on this issue. This Order is pronounced in the Open Court on 22/05/2025 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 22/05/2025 TANMAY, Sr. PSITA No.414/Ahd/2020 Asst.Year –2016-17 - 5–
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""थ" / The Respondent. संबंिधत आयकर आयु" / Concerned CIT 3. 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.