In the case of Sonega Trades & Investments Private Limited vs. Income Tax Officer, Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently held that interest income earned from capital gains bonds would be taxable under the head other income and the same cannot be taxed as business income.
The assessee, a resident engaged in the business of warehousing and letting out of House Property has filed its return of income for the relevant assessment year and declared loss of Rs. 12,53,864.
During the course of assessment proceedings, the Assessing Officer (AO) noticed that during the year the assessee earned interest of Rs.2.97 Lakhs from Capital Gains Bonds which was treated as business income and certain other miscellaneous income aggregating to Rs.48,407 was also claimed as business income. While completing the assessment proceedings the AO assessed all the said incomes under the head income from other sources.
Assessee approached CIT (A) against the order of the AO. After analyzing the facts the authority also confirmed the action of the AO.
The assessee was on further appeal before the tribunal against the stand of the lower authorities.
After considering the available facts on records the tribunal bench consists of Judicial Member D.T. Garasia and Accountant Member Manoj Kumar Aggarwal observed that the interest income earned from capital gains bonds which were rightly assessed as Income from Other Sources. Similarly, the assessee failed to show that miscellaneous income aggregating to Rs.48,407 were, in any way, related to assessee’s business and therefore, rightly been assessed as Income from other Sources.
“The assessee could not claim any expenditure from Income from House Property outside the ambit of Section 24. The expenditure as claimed by the assessee was not covered by the statutory provisions and hence not allowable. The interest income was earned from Capital Gains Bonds which was rightly assessed as Income from Other Sources,” the bench said.
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