AKSHAY ANIL JAIN ,MUMBAI vs. INCOME TAX OFFICER WARD 23(1)(6), MUMBAI

The has declared income under the head Salaries, House Property, Business and Other sources. The assessee has borrowed loans and invested in a Limited Liability Partnership (LLP) companies. It is stated that all of them are related concerns of the assessee. He further noticed that the assessee has declared interest income from these investments under the head „income from business‟, while the interest expenses have been claimed under the head „income from other sources‟. He further noticed that the assessee has declared net loss under the head „income from other sources‟ and the same was set-off against the salary income. During the course of assessmentproceedings, the assessee requested the AO to allow interest expenditure against the interest income declared under the head „income from business‟ instead of allowing it under the head „income from other sources‟. The AO accepted the same and accordingly arrived at a business loss of Rs.26,05,631/-. The AO took the view that the above said loss cannot be carried forward as the assessee has not claimed the same in the original return of income. Aggrieved by the above said stand of the AO, the assessee filed an appeal before the Ld.CIT(A).

Before the First Appellate Authority (FAA), the assessee changed his stand and prayed that both the interest income and interest expenditure should be considered under the head „income from other sources‟. The Ld.CIT(A) did not accept the above said plea of the assessee. With regard to carry forward of loss, the Ld.CIT(A) agreed with the view taken by the AO. Hence, the assessee has filed this appeal before the Tribunal.

The Ld.AR submitted that the assessee is not engaged in money lending business and hence, the interest income earned by the assessee from MAVI GENCARE LLP amounting to Rs.12,41,024/- should have been declared/assessed under the head „income from other sources‟ only. But the assessee has wrongly declared the above said income under the head „income from business‟ and also erroneously requested the AO to deduct the interest expenditure against it. He submitted that, as per law, both the items should have been disclosed under the head Income from Other sources only. The Ld.AR further submitted that the AO has got a duty to guide the assessees properly and further, any income is required to be assessed under the correct head of income only. Accordingly, the Ld.AR submitted thatboth the interest income and expenditure should be directed to be considered under the head „income from other sources‟.