Interest Income from Money Lending Business Eligible for 44AD: ITAT
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, ruled in favour of a company after observing that the alleged escaped interest income was already included in its total turnover under section 44AD.
The assessee, Viniyog Fincap, engaged in the food grain trading and money lending businesses, filed its return under section 44AD declaring total receipts of Rs 64,30,020, which included Rs 44,87,564 from sales and Rs 19,42,456 as interest income. An information received from the Insight Portal alleged that the assessee has not properly disclosed the interest income received from Malti Tarunkumar Shah. It was also noted by the AO that the assessee had the license for share and stock broking instead of money lending. The AO held that the interest income does not qualify as business income under section 44AD.
Therefore, an addition of Rs 19,42,456 was made by the AO. The company challenged the assessment before the CIT(A), which dismissed the appeal. Therefore, the company approached the ITAT.
The company argued that the alleged escaped interest income is already included in its gross turnover, and the assessee has paid tax on it under section 44AD. The assessee also argued that money-lending businesses do not require a license and their books of accounts were not rejected, so the claim under section 44AD cannot be denied.
The tribunal noted that the company had already included Rs. 19,42,456 in total receipts of Rs 64,30,020. It found that the AO’s treatment of the interest income was unjustified.
Accordingly, the ITAT partly allowed the appeal, deleting the addition of Rs 19,42,456.
Case Citation: Viniyog Fincap Vs ITO (ITAT Ahmedabad); ITA No. 1745/Ahd/2025; 15/04/2026; 2020-21
