TaxTMI 
TaxTMI 
2006 (2) TMI 496
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....Income-tax Act, 1961. 5. The third ground was addressed before us first by the learned counsel for the assessee. 6. The assessee filed the return on 31-10-2001, declaring income at Rs. 5,14,717. The case was selected for scrutiny. The assessee is carrying the business of making photographic films out of jumbo rolls in the style and name of "Photo Film Industry" (hereinafter referred to as 'PFI') and also manufacturing and sale of 35 mm and 16 mm cinematographic positive films used in the film industry for exhibition of movies and release of films in cinema halls. The raw materials used in jumbo rolls are imported from AGFA Belgium. The raw material imported is converted into final product through the process of tilting, slitting, perforation and packaging. According to the Assessing Officer, the assessee started making of cinema roll on 6-11-2000 upon the plot, which was allotted to the assessee on 6-9-2000, with Sales Tax exemption for five years. Prior to this, the business of the assessee was giving loans to various parties and making investments. The assessee changed the business all of a sudden. Incidentally, Assessing Officer noticed; Smt. Madhu Gupta, the assessee, was sub....
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....ide on the company board was written as "Photo Film Industry", whereas it would have been GGPL. The General Manager of GGPL, Shri Natarajan stated; PFI, a proprietary concern of Smt. Madhu Gupta, wife of Sushil Gupta, Director of GGPL is running business from the very same premises. He was asked about the plant and machinery installed with GGPL and the building constructed on the plot. He was also asked to explain, as there was no separate purchase of plot for PFI and no separate construction of building either or any installation of new machinery in the premises. Shri Natarajan confirmed that this was the very same plot, same machinery and the building used by GGPL. It was further submitted, there was no separate construction of building for PFI and there was no new purchase of machinery. He further submitted that the plot was surrendered to PIPDIC Industrial Estate and the same was re-allotted to Smt. Madhu Gupta, wife of Sushil Gupta, Director of GGPL. Shri Natarajan further submitted, all the infrastructure used by the assessee are the same; only name changed on paper from GGPL to PFI. The reason for change was also asked. The mere reply was that he is working on behalf of the ....
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....ndicherry factory premises were used by Photo Film Industries though not transferred on paper, but as such it was a full transfer of machinery or can be called an arrangement for usage by the new concern. (ii)There was no machinery which was moved out of the premises ever. (iii)There were no major repair of machinery since being transferred from G.G. Photo Ltd. (iv)There was only civil work carried out of the dark rooms during the period of transfer from G.G. Photo Ltd. to Madhu Gupta (Photo Film Industries). (v)The machinery showed to be owned by Photo Film Industries was installed much prior to the starting of the activity of Photo Film Industries (refer B6, Answer 23). (vi)The slitter is the main machinery required for the activity, as it is being only one which is installed and cuts the jumbo rolls and has been in very good condition throughout. (vii)The valuation of machinery was never carried out, as they were never moved out of the dark room. (viii)The assessee has transferred only part of the machinery on paper and continued to use all the machinery of M/s. G.G. Photo Ltd. The same was required for the production. (ix)The part of machinery which was transferred on p....
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.... Photo Ltd. 4.5 So in view of the elaborate facts and evidences found during the search on 26-9-2000 and survey on 8-3-2004 wherein identical facts were revealed, it is clear that business of M/s. Photo Film Industries is a reconstruction of business of M/s. G.G. Photo Ltd. and relying on the decision of CIT v. Suessin Textiles, Ball Bearing & Products 118 ITR 45 and CIT v. Kerala State Cashew Department Corporation 205 ITR 19 (Ker.), so the requirement as per clause (i) to sub-section (2) of section 80-IB is not satisfied, so the deduction under section 80-IB to the assessee is disallowed." 10. With regard to cost of machinery also the Assessing Officer held that the machinery in fact was transferred to the assessee at a low cost to meet the conditions as required under section 80-IB(2)(ii), so as to keep the total value of the machinery below 20 per cent. He further held that the assessee has used all the machinery of the company, GGPL and even the factory building, which has dark rooms, and air-conditioning plant was also used. Thus Assessing Officer held, all the existing infrastructure of GGPL has been utilised by the assessee; the details of which is also given at page 13 o....
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.... the same document was found with the assessee and also justified a sort of fair market value as per assessee group only; yet, assessee being a part of the same group, as an afterthought the machinery was transferred at Rs. 4.83 lakhs at 25 per cent of the book value by transferring only certain machinery as given vide para 6.6 of his order. He further held the GGPL transferred only certain assets on paper and did not transfer on paper the balance machinery, so as to avoid apparent transfer at very less price; whereas, in fact the whole machinery was transferred and used by the assessee. The assessee has used all the perforators of GGPL and the value of slitter as per the paper found is atleast Rs. 12,57,597.98, which was transferred at the value of Rs. 2,88,413. 12. Assessing Officer further noted, assessee has bought 4 perforator machinery, which were imported on 9-10-1998 and 5-11-1999, worth Rs. 30,61,264, inclusive of customs duty etc. As per the statement of the employees, these perforators were installed during the financial year 1999-2000. The party, GGPL, has not brought any machinery in that year. Assessing Officer held, thus it is clear that these machineries were insta....
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....ing activity of M/s. G.G. Photo Ltd. have all been transferred to Mrs. Madhu Gupta's Photo Film Industries, as found on physical verification during survey under section 133A, (v)there is no difference in any of the manufacturing activity of M/s. G.G. Photo Ltd. and M/s. Photo Film Industries, (vi)the transfer of business reason was mainly because of expiry of sales tax benefit of M/s. G.G. Photo Ltd., So in view of the above facts, why the same should not be taken as an arrangement and why the assessee should not be taken as ineligible for deduction under section 80-IB as it is a mere reconstruction of business. Further, prove why the claim of partial transfer of machinery, as reported in the Balance Sheet and P&L Account should be accepted in view of the physical verification under section 133A where it has been found that all the machinery of M/s. G.G. Photo Ltd. have been used by the assessee and no machinery has ever been removed from the said premises and also the value of machinery which was transferred from M/s. G.G. Photo Ltd. has been under valued to suit the 20 per cent old machinery ratio [as per provisions of section 80-IB to sub-clause (ii) as all the machinery ha....
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....e not given to the assessee. No cross-examination opportunity was provided to the assessee. However, it was contended that the findings for denying benefit under section 80-IB were based on these documents/statements, copies of which never made available to the assessee. Even the bare facts were not communicated to the assessee. This is clear violation of principles of natural justice and non-compliance with the express mandatory provisions of section 142(3). Even otherwise, the Assessing Officer has referred to/reproduced only a portion of the several questions and answers. The entire text of the statements is not available even today. It was contended, it is possible that some of the answers given by the witnesses may be favourable to the assessee, which had not come at all on record even in spite of the fact that no cross-examination opportunity was given to the assessee. For example, assessee in the written submission states that Shri Pavan Manghnani has stated, though the machines having WDV of Rs. 19,34,979; the current market value is only Rs. 4,83,744 and have been transferred to PFI on 1-10-2000 as per invoice copies submitted by him; which was definitely in favour of the....
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....pportunity of cross-examination to the assessee. The only other evidence relied upon by the Assessing Officer was of Shri R. Natarajan, recorded during the course of search and seizure action in the case of GGPL on 26-9-2000. Shri Natarajan was the General Manager of the industrial undertaking of GGPL and he continued to remain so in the same position in assessee's own industrial undertaking, i.e. PFL. Thus, there is no violation of principles of natural justice. CIT(A) further held that he has not been impressed by the arguments of the assessee that the assessee had been allotted the same industrial plot along with the factory building standing thereon by PIPDIC, Pondicherry and it is not an intentional planning. He held, the assessee cannot claim to have set up a new industrial undertaking without constructing her own factory building. The plant and machinery used in the earlier industrial undertaking, i.e. GGPL, remained in the hands of the assessee. The CIT(A) further held, the value of the previously used plant and machinery exceeds more than 20 per cent of the total value of the plant and machinery used in the business of the industrial undertaking and thus conditions under E....
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....ould not be reconstruction. On the other hand, reorganization of the business on sounder lines or alterations in the mode or method or scope of the activities of the business or in its personnel or infusion of new blood in the management or control of the business which may even be by some changes in the constitution of persons interested in the undertaking would be no more than reconstruction of the business if it is substantially the same business carried on by substantially the same persons." Learned counsel further submitted, the above view has been approved by the Hon'ble Supreme Court in the case of Textiles Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 and also in the following cases :-- (1)Hindustan Malleables & Forgings Ltd. v. ITO [1978] 112 ITR 389 (Pat.) (2)CIT v. Simmonds Marshall Ltd. [1986] 161 ITR 817 (Bom.) (3)CIT v. U. Foam P. Ltd. [1987] 167 ITR 586 (AP) (4)Kerala State Cashew Development Corpn. v. CIT [1994] 205 ITR 19 (Ker.) 20. It is the case of the assessee that for the purpose of reconstruction, the original undertaking not to cease functioning and its identity should not be abandoned always or to be lost. In the instant case of the assessee, GGPL cl....
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.... clear contradiction to the statement of Shri R. Natarajan, wherein he stated that the plant and machinery in the said premises belong to GGPL and that there is no purchase and installation of new machinery for PFI. Hence, this statement of Shri R. Natarajan had no evidentiary value and cannot be used against the assessee. Secondly, the statements were never made available to the assessee; as also an opportunity to cross-examine such persons was ever made available to the assessee. When the matter was brought to the notice of the CIT(A), he brushed aside the arguments, on the lines noted hereinabove. It is clearly against the principles of natural justice, as laid down by the Hon'ble Supreme Court in the case of Tin Box Co. v. CIT [2001] 249 ITR 216, wherein the Hon'ble Supreme Court held : "an assessment made without giving the assessee an opportunity of setting out his case was liable to be set aside". Similarly, in the case of Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775, their Lordships of the Hon'ble Supreme Court held : "where these fundamental principles of natural justice were violated, the addition to be treated as invalid". The assessee further relied upon the f....
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....d and came to Photo Film Industries. These are the machines in operation, further there are three machines (perforation) AGFA make which belonged to G.G. Photo Ltd. have not in use since past 3 years" and also the Department did not resolve the inconsistency in Answer to Question No. 23 of Shri A. Gurumurthy, reproduced at page 10 of the assessment order, which reads as under :-- "There are total 17 perforating machines purchased by us during the last 8 years starting in 1995. The year-wise break-up is as under : During financial year 1995-96 total 6 perforating machines including 4 Primax machine (Maba make) and two Buko make machines were purchased; During financial year 1996-97 total 5 machines comprising of 2 Primax machine (Maba make) and two Agfa make were purchased by M/s. G.G. Photo Ltd.; During financial year 1997-98 one Agfa machine (16 mm) and one Agfa machine (35 mm) were purchased by M/s. G.G. Photo Ltd.; and During 1999-2000 two Primax machine (Maba make) were installed by M/s. G.G. Photo Ltd. and during 2000-01 (September/October 2000) two more Primax machine (Maba make) were installed. We are not sure whether the installation were got done by M/s. G.G. Photo Lt....
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....only to new industry for initial period of 5 years. It is all the more inconsistent and difficult to understand that when the State Government recognises the business of the assessee as a new one and grants Sales Tax exemption accordingly; another wing of the Government, i.e., Central Government, denies the Income Tax exemption to the assessee on the same circumstances and on the same set of facts. 24. Learned counsel submitted, it is incorrect to say that on closure of industrial undertaking of GGPL, the assessee stepped into the shoes by taking over the same industrial undertaking. The matters were not arranged by two interconnected parties, i.e., GGPL and the assessee; just to avail the benefit of Sales Tax exemption, as has been concluded by the Assessing Officer. In fact, on the other hand, the assessee herself was contemplating to set up an independent industrial undertaking on the same lines, originally at Daman; again another Union Territory. It is evident from the fact that the assessee made arrangements for purchasing imported machinery of the nature of perforating machines as early as in the financial year 1999-2000. Two invoices raised by M/s. Primax in this regard are....
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....e, Mettupalayam, Pondicherry" i.e., the present address. Necessary corrections were made in the Registration Certificate. The Registration Certificate was issued to the assessee on 11-2-2000 by Commercial Tax Officer, Pondicerry (page 36 of the Paper Book). The Directorate of Industries, Government of Pondicherry issued Provisional Registration Certificate dated 31-12-1999 to the industrial unit of the assessee (page 38 of the Paper Book), showing therein at the backside the proposed location of the factory originally as "No. 20 (New No. 77), Republic Street, Villupuram High Road, Reddiarpalayam, Pondicherry-10", which was subsequently changed to present address. Thus, from any angle, it is clear that the assessee had taken positive steps and imported machineries to start a new unit. Assessee also took steps for setting up her unit at the present location, which arrangement benefited the assessee by way of getting trained staff available. There is no question of taking over of any industrial unit of GGPL, as alleged by the Assessing Officer and confirmed by the CIT(A), learned counsel submitted. 25. Assailing to the alleged failure of the assessee to meet the requirement under sec....
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....per cent requirement of new machinery for the purpose of eligibility of deduction under section 80-IB, rather the cost contribution of the assets of the assessee is less than 20 per cent when compared to the building, air condition and other plant and machinery which was not transferred on record from G.G. Photo Ltd. and used by the assessee." 27. Learned counsel further submitted, the Assessing Officer tried to fortify his stand on the basis of the following evidences :-- (a)Page 65 of the Paper Book - Paper found during survey under section 133A; (b)New block of assets of the assessee; (c)Report received from TDS Ward, Pondicherry; and (d)'As is where is' machinery of GGPL used by the assessee. Learned counsel further submitted that the Assessing Officer, at page 14 para 6.5, records that the paper found during the survey action under section 133A at Mumbai premises amply proves that the value of the machinery was not less than Rs. 40 lakhs as the same document was found with the assessee as well, which justified fair market value as per assessee group only. Assessing Officer further concludes: "the assessee being part of the same group, as an afterthought transferred, the ....
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....es Mr. Sudarshan, Mr. K. Rajendran and Mr. A Gurumurthy (refer to para B.4 question No. 23). The machines taken on first in first out basis of Rs. 17,71,906 is presumed to be installed and pro rata amount of duty of Rs. 1,64,483 being Rs. 1,06,611 is allocated to the same. So the value of old machinery in the case of the assessee, as it was utilised by M/s. G.G. Photo Ltd., already is Rs. 18,72,517, so the balance out of the block of assets is only Rs. 11,88,146 which can be called new machinery in the case of the assessees. So in any way the ratio of new machinery as compared to total machinery is below 30 per cent, far below the minimum requirement of 80 per cent as per the provisions of section 80IB". Para 7.3 - "The above view is also obvious from the fact that the assessee was a shareholder in the concern M/s. G.G. Photo Ltd., and the same would have been utilised by the group concerns of the assessee as the machinery was imported long back". 29. Learned counsel submitted, the above observation makes one thing clear, it is a glaring example how the Assessing Officer tried to use every situation against the assessee. The fact that the machinery was brought by the assessee is ....
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....ematographic negative and manufacture of positive film (page 83 of the Paper Book) shows the address of the proposed industrial unit as "Industrial Area, Daman - 396 210, Daman and Diu". Registration-cum-membership certificate issued by the Federation of Indian export Organisation on 1-9-1998 (page 84 of the Paper Book) also shows the address of the unit as Daman. Learned counsel further submitted, assessee was allowed to set up her factory at the premises of Shri Gautam Gupta, as is evident from the sale deed dated 2-3-1998 (pages 85 to 95 of the Paper Book) and that the installation certificate issued by the Superintendent of Central Excise, Pondicherry regarding imported machinery also mentions that originally the machinery to be installed at Daman Industrial Area, Daman (page 69 of the Paper Book). 31. Learned counsel further submitted, another factor that weighed with the Assessing Officer and the CIT(A), against the assessee, was the report received from TDS Ward, Pondicherry as a consequence of survey under section 133A conducted at Pondicherry, along with copy of bill issued by GGPL to PFI dated 16-10-2000. As per the bill, the slitter machines Muller was to be sold at Rs.....
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....ned Assessing Officer has tried to include income of the nature of 'perquisites from business' being the difference between the WDV in the books of GGPL of the machinery purchased by the appellant (Rs. 19,34,979) and the actual purchase price (Rs. 4,83,744) in the hands of the appellant. Thereby, he has acknowledged the genuineness of the purchase. 4. As regards the machinery of GGPL, lying at the said factory premises, the same cannot be taken to mean that the appellant was using them. As regards the allegation of the Ld. Assessing Officer that the statements of the employees prove that the same were being used, the appellant would like to draw the attention of Bench to page 8 of the assessment order being Answer No. 11 of Shri V. Sudrshan wherein he stated, "there are three machines (perforation) AGFA make which belonged to G.G. Photo Ltd., have not in use since past 3 years". This clearly shows that the findings of the Ld. Assessing Officer are without proper enquiry, based on improper verification of facts and driven by a pre-conceived notion of incorrect claim. Hence the same cannot be relied upon. 5. With regard to the above issue again, it is being argued that the essentia....
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....ld machinery purchased/transferred is less than 20 per cent of the machinery. Thus, the condition laid down under section 80-IB(2)(ii) is clearly satisfied. 34. Learned counsel submitted, the decisions relied upon by the Department in the case of Sussein Textiles, Ball Bearing & Products (P.) Ltd. (supra) and in the case of Kerala State Cashew Development Corporation (supra), are not applicable in the instant case of the assessee. That was a case wherein the building also been considered and lease accepted as a type of transfer. In that case the building was positively and specifically included in the assets; which is not so in the case of the assessee. 35. Without prejudice to the above, the learned counsel further submitted as under :-- "Without prejudice to the main contention of the appellant about allowability of deduction under section 80-IB at the rate of 100 per cent of the profits and gains of the industrial undertaking of the appellant at Pondicherry, as claimed and argued about above, the appellant also wants to put forward an alternative claim in this regard. The appellant submits that if the Hon'ble ITAT agrees with the Departmental contention that the industrial un....
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.... industrial undertaking in a different building and a different location distinct from the industrial undertaking of GGPL. The assessee got the industrial plot used by GGPL in her name with the same set of machinery and even the staff of GGPL continued to run the business, though the ownership changed. In fact, there is only a change in name and no new industrial undertaking has come into existence. There is no dispute that the nature of business in both the industrial undertakings has remained exactly the same. The provisions of section 80-IB(2) clearly prohibit the allowance of special deduction in such a situation. The learned DR further submitted, assessee's undertaking is nothing but reconstruction of business already in existence and therefore the assessee is not entitled for the benefit under section 80-IB(2). Further, the learned DR submitted, the machineries used by the assessee and the earlier assessee, i.e., GGPL, one and the same. In fact, the value was not fixed by any professional. It was only an admitted estimation between the two parties; interested parties. It is an agreement between the family members. For all practical purposes the employees are one and the same.....
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....rived at by the revenue authorities on the basis of inspector's report by the Department. It was unilaterally obtained at the instance of AAC and no opportunity was afforded to the assessee to pursue the report or to counter it. But at a later stage the counsel on behalf of the Department referred to cross-examination of the assessee where this report was put to the assessee. However, Hon'ble High Court observed "counsel on behalf of the Department referred to the cross-examination of the assessee where this report was put to the assessee (vide Annexure "G"), Question Nos. 32 to 35. No doubt in this cross-exmaination the report has been put to the assessee but we would be surprised if any assessee, muchless the present assessee, could have understood and answered the contents of that report on the spur of the moment, so to say in the witness box, when it was suddenly shown to him and he was questioned about it". In other words, the Hon'ble High Court held, even if the assessee is provided the copy, merely on the spur of the moment that should not be treated as an effective opportunity given to the assesee. In the instant case there is no such case even for the revenue. The opportun....
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.... brought on record, the statement cannot be accepted in part where it is perverse and it can be rejected where it is not so. So also Shri V. Sudarshan stated, which is recorded at page 8 of the assessment order, that three machines (perforation) AGFA make, which belonged to GGPL, have not been used since last three years. So also the answer to Question No. 23 of Shri A. Gurumurthy, stated at page 10 of the assessment order. It is also the case of the assessee that Assessing Officer has not made any attempt to cross verify the above statements before coming to a conclusion and neither summoned any representative of GGPL so as to ascertained the truth. On the day of search, GGPL, strictly speaking, was not in existence but only PFI and therefore they are not in a position to explain the entire position. 42. Thirdly, the State Government gave the licence to the assessee after cancellation of the licence of GGPL by the Pondicherry Government. It is difficult to attribute any motive to the State Government's action in cancelling one licence and giving it to the other party on the basis of party's request. It is also to be seen that the assessee, prior to shifting to Pondicherry, import....
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.... It is the stand of the revenue that the assessee failed to meet the requirement under section 80-IB(2)(ii) read with Explanation 2. We have recorded assessee's version that the machinery of GGPL was transferred to the assessee at market price for Rs. 4,83,745; whereas according to the Assessing Officer, as per the Companies Act, the value of the machinery comes to Rs. 17,12,893; thereby the true value of the machinery to the total machinery would be 35 per cent or so as against assessee's assertion that it is below 14 per cent. We have already dealt with the above issue in this order; therefore, the contention of the assessee cannot be rejected. 46. Another stand of the revenue is that during the survey action at Mumbai premises, a piece of paper (page 65 referred to at page 14 of the assessment order) was seized, which showed the value of the machinery at Rs. 40 lakhs, justifies the fair market value given by the Assessing Officer; particularly so, assessee being part of the same group. Assessing Officer treated this as a planning to bring down the price of the machinery; so as to bring the value of the machinery transferred below 20 per cent, to avail the benefit under section ....
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....ject this contention of the assessee. 49. Coming to other contention regarding building and dark room, it is the case of the assessee that same is part of the plot surrendered by GGPL and the assessee has not treated this as part of the plant and machinery and depreciation at higher rate relevant to plant and machinery. 50. Coming to the report of TDS Ward, Pondicherry regarding the sale bill came into possession, there is nothing brought on record to show ultimately that the price mentioned was received/paid. This fact has not at all been verified. On the contrary, assessee's assertion is that it was paid at a much lesser price. Therefore, this report, which was not put before the assessee, does not further the revenue's case. 51. Coming to the decision relied by the revenue in the case of Kerala State Cashew Development Corpn. (supra), the facts are distinguishable. It was a case wherein in appeal for the assessment year 1975-76 the assessee placed reliance on the Explanation to section 80J [the non-applicability of which had been conceded in 1972-73 (as recorded by the Tribunal) and followed in the next two years] on the ground that total value of the building, machinery and ....
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....sult of this the percentage of the value of the machinery used by the assessee from erstwhile GGPL has been considerably brought down. This contention, we have already rejected. 53. The next stand of the revenue is that there were some machines lying in the premises of GGPL, which were not sold but used. We find there is no evidence brought to this effect. We have already noted that three machines imported by the assessee, also lying in the same premises, which admittedly not been used for three years, even according to the assessee's employees, whose statements have been relied by the revenue. Regarding these three machines it is also to be seen that first it was imported, as evidenced hereinabove, at Daman; subsequently transferred to Pondicherry in a different place other than the present premises of the assessee; and the certificate of installation is also subsequent to the search. 54. For the above reasons, we are of the view that the conditions laid down under section 80-IB(2) read with Explanation 2 have been satisfied with. Therefore, it is not necessary for us to deal with the assessee's alternate contention that deduction under section 80-IB(4) at the rate of 25 per cen....
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....sing Officer as under : During the relevant assessment year, Rs. 6,89,407 was claimed as loss from business of financing as no interest income was provided against loans advanced to the following four parties on the ground that the loans were sticky : Name of the party Amount (Rs.) Chaudhari Enterprises 6,00,000 Mark Film International 19,99,950 Monalisa Films 26,62,027 Sap Frish Films 4,00,034 58. Assessing Officer calculated the interest at the rate of 18 per cent in the case of last three parties mentioned and 15 per cent from Chaudhari Enterprises, which worked out to the impugned amount and added it against the assessee's total loss of Rs. 6,89,407.06 returned by the assessee, which was allowed to be set off. It was further held by the Assessing Officer that the assessee follows mercantile system of accounting and that in the mercantile system of accounting it is clear that if the assessee acquires the right to receive income, the income can be said to have accrued to him though it may be received later on. He further held, if the assessee acquires a legal right to receive the amount, the amount is to be treated as accrued to the assessee and the Assessing Officer ....
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....he accounting position of NBFC. The Tribunal further held, following the decision of the Delhi Bench in the case of TEDCO Investment & Financial Services (P.) Ltd. v. Dy. CIT [2003] 87 ITD 298 (Delhi) interest on sticky loans not to be considered as income of NBFC. It is the case of the assessee that if the assessee is sure that certain income unlikely to arise, it need not provide for such income even while following the mercantile system of accounting. In this regard, assessee relied upon the decision in the case of CIT v. Motor Credit Co. (P.) Ltd. [1981] 127 ITR 572 (Mad.) and in the case of CIT v. State Bank of India [2003] 262 ITR 662 (Bom.). The fact that the assessee has not received any income is not controverted. What is taxed is notional income. Only the real income is to be taxed. In the case of four parties, even the receipt of principal amount was doubtful. Relying upon the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT v. Ferozepur Finance (P.) Ltd. [1980] 124 ITR 619 as also the decision of the Hon'ble Gauhati High Court in the case of Highways Construction Co. (P.) Ltd. v. CIT [1993] 199 ITR 702, learned counsel submitted, the Hon'ble Punj....