2018 (4) TMI 243

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....f Rs. 98,76,767/- made by the A.O. on the basis that assessee has given unsecured interest free loans and advances against projects/properties to the tune of Rs. 9,86,87,741/-? 2. That the order of Ld.CIT(A) is erroneous and is not tenable on facts and in law. 3. That the grounds of appeal are without prejudice to each other. 4. The appellant craves leave to add, alter, amend or forego any grounds of appeal raised above at the time of hearing." 2. Brief facts of the case are as under: Assessee filed its return of income declaring 'nil' income on 30/09/11. Subsequently the return was revised on 20/02/12 at 'nil' income. The return was processed under section 143(1) of the Income Tax Act, 1961 (the Act) and case was selected fo....

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.... Only real incomes are charged under the Act. However, the Ld. Assessing officer has treated notional interest income of Rs. 98,76,767/- as business Income during the relevant year thereby himself accepting that these advances are business advances/advances for commercial expediency. Whereas business advances are neither subject to notional income nor interest expense is disallowable u/s 36(1)(iii). Appellant company had given business advances against properties/projects amounting to Rs. 9,86,87,741/- which were appearing as opening balances as on 01.04.10 as well as closing balances as on 31.03.11. The appellant company has not advanced any business advances during A.Y.2011-12. Appellant company is regularly assessed u/s 143(3) for ....

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....s other judicial pronouncements in support of its claim. I, therefore, delete the impugned addition of Rs. 98,76,767/- on estimation of interest on trade advances. This ground of appeal is allowed." 2.3. Aggrieved by the order of Ld.CIT(A) revenue is in appeal before us. 2.4. Ld. DR placed reliance upon the order of Ld.AO. 2.5. However Ld.AR submitted that the issue stands squarely covered in favour of assessee by order of this Tribunal in assessee's own case for assessment year 2010-11 in ITA No. 5914/Del/2013 vide order dated 26/08/15. Ld.AR submitted that the advances for the year under consideration are same as that of assessment year 2010-11. He submitted that these are opening balances appearing in the books of accounts of....

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....levant year thereby himself accepting that these advances are business advances/advances for commercial expediency. Whereas business advances are neither subject to notional income nor interest expense is disallowable u/s. 36(1)(ii). In previous years the Revenue has taken a view of allowing the same and at this juncture cannot take a different stand. There should be consistency and definiteness while adopting the approach by the Revenue. The CIT (A) has taken into consideration the judgment of Karnataka High Court in case of CIT Vs. Sridevi Enterprises (1991) 192 ITR 165. The CIT (A) has also taken note of S. Builders Limited Vs. CIT, wherein the Hon'ble Supreme Court held that if amount is advanced to the subsidiary or associated comp....