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The Supreme Court in [2015] 5 ITR-OL 277 (SC) held that rule of consistency is supreme unless the revenue could demonstrate that there is a material change in circumstances of the case from the preceding years.
In this case, the High Court was to decide whether interest income on fixed deposits earned by the assessee developer is assessable under the head business or other sources.
The Court held that it was not the case of the Revenue that the amount which the assessee had received from its co-developers was not related to the business activity of the assessee. It was not also the case of the Revenue that the investment of such amounts in fixed deposits was not linked to the business of the assessee whether in the form of providing a bank guarantee or keeping the amount readily available for payment to the L&DO upon change of land use. There was no dispute that for the earlier three assessment years, the interest income earned in similar circumstances was held to be business income by the Commissioner (Appeals) which orders had been accepted by the Revenue without demur. Given these facts, the Court held that for rejecting the view taken for the earlier assessment years, there must be a material change in the fact situation. There was no gainsaying that the previous view would have no application even in cases where the law itself had undergone a change but before an earlier view could be upset or digressed from, one of two things must be demonstrated, namely, a change in the fact situation or a material change in law whether enacted or declared by the Supreme Court. In the absence of a change in the facts or any additional input, there was no compelling reason for taking a different view. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the view taken for the earlier assessment years continued to be applicable even for the year under consideration.
In this case, the facts were that the source for investment in FDs were the advance amounts received from the co-developers so that there was enough linkage that the interest earned was from business

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