Sri Chowdry, Gopalakrishnasetty Narayan Vs. The Income Tax Officer, Ward – 2(3), Mysore

Parties Involved

Facts Summary

The assessee, Sri Chowdry, Gopalakrishnasetty Narayan, is an individual deriving income as a share of profit from the firm M/s Parvati Enterprises and is claimed to be engaged in the business of money lending. He filed a return of income declaring income of ₹2,32,722/- under section 44AD of the Act, on gross receipts of ₹21,09,014/- from the money lending business. The case was selected for scrutiny, and the Assessing Officer (AO) observed that the assessee did not obtain a license for money lending activities as required under the Karnataka Money Lenders Act, 1961. The AO held that the activity of the assessee in the absence of a requisite license does not constitute a business and treated the gross receipts as 'Income from Other Sources' under the Act. Aggrieved by this order, the assessee appealed before the learned Commissioner of Income Tax (Appeals) (CIT(A)), which upheld the findings of the AO and dismissed the appeal ex-parte. The assessee then appealed before the Tribunal.…

Legal Issues

• 1. Whether the income derived from money lending activities can be treated as 'Income from Other Sources' or 'Business Income.'

Judgment Outcome

Decided in favour of Assessee.

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