2017 (1) TMI 678

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....this case was completed u/s 143(3) of. Act 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 th....

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....hat in the business advancing interest free loans 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. ....

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....ly by a rectification order same was reduced to Rs. 72 lacs. 7. Deciding the appeal, filed by the assesse, the FAA held that in the computation of income no expenditure, except an amount of Rs. l, 212/- was claimed deductible by it, that a plain reading of the provisions of section 14A made it apparent that under this section disallowance could be made when the assessee would claim deduction of expenditure, that if an assessee had not claimed any expenditure then there was no scope of disallowance, that the disallowance could not exceed the expenditure claimed by assessee. Accordingly, he directed the AO to restricted the disallowance to Rs. 1, 212/- only. 8. Before us, the DR stated that matter could be decided on merits. The AR cont....