Question And Answer
Subject: Interest on advances and applicability of Sec 44AD.
Querist: Govind Agrawal
Answered by:
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Date: April 4, 2024
Query asked by Govind Agrawal

Assesse has been carrying on the business of lending money on interest, he has offered the income of interest u/s Section 44AD at 88% against the statutory requirement of 6%.

12% of the income have been incurred on expenses such as Bank charges, Depreciation, insurance of Car and its running expenses, salary of accountant/manager and Telephone Expenses.

The case have been reopened for the A.Y. 2020-21 u/s 148 of the I.T Act, 1961 on the ground that income should have been offered under the head of Income from Other sources.

Whether the action of the A.O is justified?
Any Case Laws on the issue.

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Answer given by

The action of the Assessing Officer is not justified . One has to study whether the reopening notice is issued by following the due process of law . If the assessment was completed earlier under section 143(3) , whether any specific question was raised in the course of assessment . Even under the new provision reassessment due to change of opinion is not permissible . For carrying of business of money lending the Money lending licence is not a requirement . Refer Hasmukh Estates Pvt Ltd v. ACIT (2023)459 ITR 524/(2024) 158 543 ( Bom)(HC), Siemens Financial Services Pvt Ltd v. Dy.CIT ( 2023) 457 ITR 647 /154 159 (Bom)( HC) www.itatonline .org

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