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Facts
The appellant, Singhal Builders, challenged an order dated 15.02.2024 by the CIT(A) concerning assessment year 2017-18. The CIT(A) had partly allowed the assessee's appeal against an assessment order dated 16.12.2019.
Held
The Assessing Officer (AO) made an addition of Rs. 15,66,620/- on account of interest received on income tax refund, treating it as income from other sources. The CIT(A) upheld the addition but limited it to Rs. 4,88,959/-, deleting the remaining amount of Rs. 10,77,661/-.
Key Issues
Whether interest received on income tax refund, shown as business income, should be treated as income from other sources, and the extent of addition sustained.
Sections Cited
244A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES, “ B-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 285/JPR/2024
vkns'k@ORDER PER: NARINDER KUMAR, J.M.
The appellant is a partnership firm. By way of this appeal, it has challenged order dated 15.02.2024 passed by Learned CIT(A)/NFAC, Delhi. The impugned order pertains to the A.Y 2017-18, whereby Learned CIT(A) partly allowed the appeal filed by the assessee-appellant, while
Singhal Builders vs. ACIT challenging assessment order dated 16.12.2019 passed by the Assessing Officer.
By way of said assessment order, total income of the assessee was computed as under:-
(All amounts in Rupees) 1. Returned income, as declared by the assessee 3148560 2. Additions/disallowances 5469243 (a) Excess claim of Depreciation 787502 [as discussed in Para-04 above] (b) Trading Addition 3115121 [As discussed in Para-05 above] (c) Interest on Income Tax Refund 1566620 [as discussed in Para-06 above] 3. Total Income 8617803 R/o 8617800 Significant to note that the first mentioned two additions have been deleted by ld. CIT(A).
Singhal Builders vs. ACIT 3. As regards the 3rd addition i.e. interest on income tax refund, as observed by Assessing Officer the assessee firm had received total interest u/s 244A on the amount refund, but shown total interest of Rs. 4,88,959/- under the said provision; that the assessee did not report his income to the tune of Rs. 10,77,661/-.
Accordingly, an addition of Rs. 15,66,620/- was made by the Assessing Officer by observing that the interest on amount of refund was to be treated as income from other sources.
As regards the abovesaid finding on the point of interest on refund, ld. CIT(A) upheld the same while observing that the interest income was income from other sources. At the same time, ld. CIT(A) held that interest income to the tune of Rs. 4,88,959/- only was the income from other sources. In this manner, the ld. CIT(A) deleted an addition of Rs. 10,77,661/- made by the AO, and upheld the addition and to the extent of Rs. 4,88,959/-.
Hence, this appeal
Arguments heard. File perused.
As noticed above, the appeal filed by the appellant came to be dismissed by ld. CIT(A) in part i.e. on the point of interest income on Singhal Builders vs. ACIT refund. As per impugned order, such income by interest on refund is actual income other sources, and not a part of business income of the assessee firm.
While challenging the above-said finding, ld. AR for the appellant has contended that ld. CIT(A) erred in confirming the addition of a sum of Rs. 4,88,959/-, as said addition made by the Assessing Officer is contrary to the provisions of law. Therefore, it has been urged that the impugned order upholding the addition as regards the income by way of interest on refund, deserves to be set aside.
On the other hand, ld. DR for the department has submitted that he stands by the reasons recorded by the Assessing Officer & ld. CIT(A).
Admittedly, in the return of income, relating to the Assessment Year 2017-18, the assessee firm depicted income of Rs. 4,88,959/- against column No. 02(x) of Profit and Loss Account for the Financial Year 2016- 17.
In the opinion of the Assessing Officer and ld. CIT(A), said income was not an income from business of the assessee, and rather an income from other sources. The fact remains that the said income of Rs. 4,88,959/- was shown under sub-column “any other income” of main column “other
Singhal Builders vs. ACIT income”, so far as Profit and Loss Account for the Financial Year 2016-17 is concerned.
Learned DR for the department does not dispute this fact.
No doubt, when interest is paid on the income tax refund amount, same is required to be reported under the head ‘income from other sources.’ Here, interest was admittedly allowed u/s 244A of the Act and the assessee firm somehow treated and depicted the said amount as business income, instead of income from other source, but there cannot be said to be any loss to the exchequer, particularly, when the assessee is said to have paid tax on said income at the same rate, even though under a different heading.
In view of the above discussion, the appeal filed by the assessee challenging the impugned order as regards the addition due to income by way of interest on refund, deserves to be allowed, and the addition deserves to be deleted. Result
In view of above findings, the only argument raised on behalf of the appellant is accepted, and while allowing the appeal, impugned order confirming the addition of Rs. 4,88,959/- made simply because the same
Singhal Builders vs. ACIT “income from other sources” and not to be treated as a part of “ business income”, is set aside.
Order pronounced in the open court on 15/07/2024.
Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 15/07/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Singhal Builders, Bharatpur 1. izR;FkhZ@ The Respondent- ACIT, Circle, Bharatpur 2. 3. vk;dj vk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File 5. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेजज. त्महपेजतंत