2017 (1) TMI 678

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....on 29. 10. 2010. Thereafter the case was reopened u/s 147 of I. T. Act and reassessment was completed u/s 143(3) r. w. s. 147 of the Act on 28/03/2013 , determining its total income at Rs. 4, 26, 49, 193/-. 2. First ground of appeal is about deleting the addition made by the AO under the head notional interest, amounting to Rs. 7. 48 crores. In this case the AO received, information from the office of the DGIT(Inv. )that the central agencies, investigating the cases pertaining to 2G allocation, have suggested that the financial transactions of the assessee have to be looked into for tax implication as it was also figured in the 2G spectrum scam. While completing the re-assessment, the AO held that the assessee had paid Rs. 175 crores to Lo....

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....ns was a common practice, that if someone was advancing interest free loan out of its own funds or out of non interest bearing borrowed funds to anybody, the AO cannot tax notional income of interest unless there was any proof of underhand payments of interest by the said person, that in the instant case there was no proof that the interest bearing borrowed capital was diverted for non interest bearing loans, that the addition made by the AO on account of notional interest was not sustainable. 4. Before us, the Departmental Represnetative(DR)supported the order of the AO. The Authorised Representative(AR)supported the order of the FAA and relied upon the cases of Highway Construction Co. P. Ltd. (199 ITR 702), B and A plantations and Indus....