Whether AO can change head of Income from business to Income from other sources

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Link of full case : https://taxlawsonline.com/agtlol.html... • [2024] 114 ITR (Trib) (S.N.) 25 (ITAT[Del]) • [BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — DELHI E BENCH] • MALBROS HOLDINGS P. LTD. • (before amalgamation M/s. Sunkalp Portfolio Investments P. Ltd.) • v. • INCOME-TAX OFFICER • VIKAS AWASTHY (Judicial Member) and NAVEEN CHANDRA (Accountant Member) • July 29, 2024 • Playlist: Head of Income • Assessment Year: 2013-14 • Favouring: Assessee, person • Question: Whether A.O. can change head of Income from business to Income from other sources just because assessee is not registered as NBFC Company? • 1) During the previous year relevant to the assessment year 2013-14, the assessee, engaged in the business of leasing and finance, had earned interest income on inter-corporate deposits and fixed deposits, which was offered to tax as business income. • 2) The assessee, in its profit and loss account, had shown interest income under the head “Income from operations”. • 3) The A.O. changed the head of income from “Profits and gains from business or profession” to “Income from other sources” on the ground that the assessee was not a registered non-banking finance company. • 4) The findings of the Assessing Officer were upheld by the CIT (A). • 5) On appeal: ITAT held that the rule of consistency demands that the nature of assessee’s income should not be disturbed in one of the intervening assessment years when in the past and in the subsequent assessment years, the Revenue had already accepted the nature of income. • 6) The object clause of the assessee’s memorandum of association clearly defined the objects for which it was incorporated and the business it intended to carry on. • 7) Merely because the company was not registered as a non-banking financial company could not be a reason to change the head of income. • 8) The assessee had been consistently showing interest income as business income and in the preceding and succeeding assessment years the Department had accepted the assessee’s interest income as business income. • 9) Therefore, there was no merit in the reasons for changing the head of income. • 10) Apart from that it was also held that there was no reason for disallowing amortisation of expenditure in the impugned assessment year when it had been allowed in the preceding and succeeding assessment years. • 11) The A.O. was to allow amortisation of preliminary expenses in the impugned assessment year as well. • #malbrosHoldingsPLtd • #29July2024 • #DelhiITAT • #HeadOfIncome • #IncomeFromBusiness • #IncomeTaxNotices • #IncomeTaxCases • #incometaxcasesanalysis • #IncomeTaxLaw • #advocateamitkumargupta • #9811291390(Call only after taking time on whatsApp) • #[email protected] • #[email protected] • Link for some important videos: • 1) WHETHER TRIBUNAL CAN REMAND MATTER IN ENTIRETY WHERE DEPARTMENT DID NOT FILE CROSS APPEALS?- https://www.youtube.com/watch?v=gkqMk... • 2) WHETHER ASSESSEE HAS ALSO TO CHALLENGE THE FINDINGS OF THE A.O THAT NOTICE HAS BEEN SERVED?- https://www.youtube.com/watch?v=XbZWh... • 3) WHETHER EXTENDED TIME LIMIT U/S 149(1)(b) CAN BE USED ON THE BASIS OF SALES CONSIDERATION U/S 48?- https://www.youtube.com/watch?v=WuRt9... • 4) WHETHER NOTICE SENT TO SECONDARY EMAIL IS VALID IF NOT SENT TO PRIMARY E-MAIL U/S 148?- https://www.youtube.com/watch?v=aAzHE... • 5) WHETHER ENTRIES IN BOOKS OF ACCOUNTS CONCLUSIVE TO DETERMINE TAXABLE INCOME OF ASSESSEE?- https://www.youtube.com/watch?v=Rx8JQ...

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