TaxTMI 
TaxTMI 
2009 (11) TMI 945
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the sake of convenience, we dispose of all these three appeals by this common order. 2. The identical issues in these three appeals are stated below:- a) Disallowance of interest claimed in the Finance division of Chandra Transports for the reason that the investment made from the loan borrowed did not yield income. b) Addition of notional interest of Rs. 10,86,717/- on the Sundry debtors balances in the business concern viz., Coastal Packagings. 3. The assessee is the proprietor of various concerns viz., M/s Coastal Packagings, M/s Chandra Transport, White gold ginning mills and also the Managing director in M/s Chaitanya Packagings Pvt. Ltd and M/s Tulasi Seeds (P) Ltd. M/s Chandra Transport has got two divisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cluding credits for goods, expenses, loans etc; but he did not charge any interest from the sundry debtors. The AO noticed that the sales invoice contains a clause to charge interest @ 18% in case of late payment. The AO also noticed from the assessment record of earlier year that the assessee had filed legal claims on some parties and such claim included interest claim also. Accordingly the AO took the view that the assessee could collect interest @ 24% p.a. on the outstanding balances due from Sundry debtors. Since the number of debtors were more, the AO worked out average sundry debtors balance and worked out interest at 12% for assessment year 2004-05 and at 18% for other two years and added the same to the total income, by stating that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with certain directions. We notice that the issue agitated before us is similar in nature and hence we think it proper to set aside the above said issue relating to this year also to the file of the assessing officer, in order to enable him to take uniform view in all the years. We order accordingly. Needless to mention, the assessee should be given necessary opportunity of being heard to explain his case. 5. The next issue relates to the disallowance of interest payment by calculating notional interest on the Sundry debtors balance. The facts relating to this issue have been narrated earlier. Though the terms and conditions printed on the sales invoices contained an interest clause, the submission of the assessee is that he has not col....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces has held as under: "There is no finding of the fact to the effect that actually loan had been granted to Managing Director or any other person on interest, or that interest had actually been collected and the collection of the interest was not reflected on the accounts. The finding of the ITO is that the assessee ought to have collected interest. In other words, in the view of the ITO is that the assessee ought to have collected interest. In other words, in the view of the ITO which has been accepted by the Tribunal, the assessee as a good business concern should not have granted interest free loan, or should have insisted on payment of interest. If the assessee had not bargained for interest, or had not collected interest, on....