SUBHKAM STOCKS & SHARES PVT. LTD. (MERGED INTO KHAZANA TRADELINKS PVT. LTD.), MUMBAI v. DCIT - CIRCLE 4 (2)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI BEFORE SHRI R.C. SHARMA ACCOUNTANT MEMBER ./ I.T.A. NO. 5683 / MUM /201 8 ( / ASSESSMENT YEAR S : 20 13 - 1 4 ) SUBHKAM STOCKS & SHARES PVT LTD. (MERGED INTO KHAZANA TRADELINKS PVT LTD. ) 14 TH FLOOR MAKER CHAMBERS IV 222 NARIMAN POINT MUMBAI / VS. DCIT CIRCLE 4(2)(1) AAYAKAR BHAVAN MK ROAD MUMBAI ./ ./ PAN/GIR NO. : AAACM7389K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SANJAY R. PALIKH AR / RESPONDENT BY : SHRI AKTHAR H ANSARI DR / DATE OF HEARING 06 /11 /2019 / DATE OF PRONOUNCEMENT 13 /11 /2019 / O R D E R PER R.C. SHARMA(A.M.) THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE A.Y. 2013 - 14 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2. ONLY GRIEVANCE OF ASSESSEE RELATES TO TREATING THE INTEREST INCOME OF RS. 29 24 546/ - AS INCOME FROM OTHER SOURCES AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE. ITA NO S . 5683 / /MUM/2018. SUBHKAM STOCKS & SHARES PVT LTD. MUMBAI . - 2 - 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE C OMPANY DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y 2013 - 14 CARRIED ON ITS BUSINESS OF DEALING IN SHARES & SECURITIES. THE ASSESSEE FILED IS RETURN OF INCOME FOR THE A.Y 2013 - 14 ON 27.09.2013 DECLARING A TOTAL INCOME / (LOSS) AT RS. NIL COMPRISING OF INCOME / LOSS FROM BUSINESS. WHILE ASSESSING THE INCOME FROM BUSINESS AT RS. NIL A.O ASSESSED INTEREST INCOME AS INCOME FROM OTHER SOURCE AT RS. 29 24 546/ - . BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF AO. 3. I FOUND THAT ASSESSEE WAS IN RECEIPT OF INTEREST OF RS. 10 24 986/ - ON LOAN ADVANCED AND INTEREST OF RS . 18 98 560/ - AS INTEREST ON FIXED DEPOSITS GIVEN TO N A TIONAL S TOCK E XCHANGE (NSE) . I FOUND THAT ASSESSEE WAS DEALING IN SHARES AND SECURITIES AND WAS MEMBERS WITH NATIONAL STOCK E XCHANGE . DURING THE F.Y 2011 - 12 THE ASSESSEE DECIDED TO SURRENDER ITS TRADING MEMBERSHIP OF THE EXCHANGE AND FOR THAT PURPOSE IT WAS REQUIRED TO KEEP FIXED DEPOSIT OF RS. 1 44 50 000/ - FOR A PERIOD OF THREE YEARS AS PER THE NORMS OF SURRENDERING THE TRAD ING MEMBERSHIP OF ITA NO S . 5683 / /MUM/2018. SUBHKAM STOCKS & SHARES PVT LTD. MUMBAI . - 3 - EXCHANGE PENDING ACCEPTANCE BY THE EXCHANGE OF SURRENDERING OF TRADING MEMBERSHIP BY THE ASSESSEE. 4. I HAVE FOUND THAT THIS DEPOSIT WAS UNDER BUSINESS COMPULSION ACCORDINGLY INTEREST INCOME IS TO BE TAXED AS INCOME FROM BUSINESS ONLY . THIS DEPOSIT WAS NOT KEPT BY THE ASSESSEE AS PER H I S SWEET - WILL BUT UNDER BUSINESS COMPULSION THEREFORE INTEREST ON SUCH DEPOSIT IS TO BE ASSESSED AS INCOME FROM BUSINESS. HOWEVER INTEREST INCOME WITH RESPECT TO DEPLOYMENT OF SURPLUS FUNDS WITH ONE OF THE PARTY ON TEMPORARY BASIS DOES AMOUNT TO DEPOSIT GIVEN UNDER ANY BUSINESS COMPULSION BUT IT WAS SURPLUS FUND WHICH THE ASSESSEE HAS DEPLOYED FOR EARNING INTEREST INCOME. ACCORDINGLY A.O HAS JUSTIFIED IN TREATING SUCH INTEREST INCOME AS INCOME FROM OT HER SOURCES. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN PART. THIS ORDER PRONOUNCED IN OPEN COURT ON 13/ 11 /201 9 SD/ - ( R.C. SHARMA ) ACCOUNTANT MEMBER MUMBAI DATED 13 /11 /20 1 9 KRK PS ITA NO S . 5683 / /MUM/2018. SUBHKAM STOCKS & SHARES PVT LTD. MUMBAI . - 4 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// 1 . / ( ASST. REGISTRAR) / ITAT MUMBAI 2 . OTHER MEMBER 6 . DATE ON WHICH THE APPROVED DRAFT COMES TO THE S THE BENCH CLERK 18.1.18 7 . DATE ON WHICH THE FILE GOES TO THE HEAD CLERK