Interest Income from Staff Loans and Advances, Fixed Deposits and Advances to be Treated as Business Income: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Ahmedabad Bench, while deciding a group of appeals filed by both the assessee and the revenue, held that interest income from staff loans and advances as well as fixed deposits and advances, are to be treated as business income.

The aforesaid observation was by the tribunal when seven appeals, four by the assessee and three by the Revenue, pertaining to the same assesse and involving common issues, as against different orders passed by the CIT(A)-III/II, Vadodara for different assessment years, were filed before it.

The ground of the appeals is that the Commissioner of Income Tax (Appeals), (CIT(A)), has erred in law and on facts in confirming the additions of Rs.24,65,05,100/- on account of Capital Grants & Subsidies and Consumers’ Contribution based on which the appellant was to transfer 15% of the total Grants/subsidies/ consumer contribution received during the year, as against 10% offered, the submission of the appellant that error in law and on facts was committed by the CIT(A) by his confirmation being made upon the additions, with respect to the interest income from staff loans and advances, terming the same to be income from Other Sources against the Business Income.

Hearing the rival contentions, perused the materials on record, and upholding its observation that interest income from staff loans and advances as well as fixed deposits and advances are to be treated as business income, the tribunal dismissed the revenue’s appeal, observed as below:

“As regards Ground No. 2.1 and 2.2 of Revenue’s appeal, it’s identical to Ground No. 2.1 and 2.2 of Revenue’s appeal for A.Y. 2013-14, hence, the same finding given by us therein will be applicable herein as well.

Hence Ground No. 2.1 and 2.2 for A.Y. 2014-15 are dismissed.

Therefore, ITA No. 617/Ahd/2018 for A.Y. 2014-15 filed by the Revenue is dismissed, and as a result, ITA No. 2089/Ahd/2013 A.Y. 2010-11, ITA No. 1751/Ahd/2016 for A.Y. 2012-13, ITA No. 445/Ahd/2018 filed by the assessee for A.Y. 2013-14 and ITA No. 446/Ahd/2018 for A.Y. 2014-15, these four appeals filed by the assessee are partly allowed for statistical purpose.

 The Revenue’s appeals being ITA No. 1968/Ahd/2016 for A.Y. 2012-13, ITA No. 616/Ahd/2018 for A.Y. 2013-14, and ITA No. 617/Ahd/2018 for A.Y. 2014-15 thus stands dismissed.”

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