TaxTMI 
TaxTMI 
2018 (11) TMI 482
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....0/- is made on a notional basis and is not actual income of the assessee. 1.2 That the Ld.A.O. has not disallowed the expenditure on interest but has added notional income. 1.3 That the notional income is not income which can be brought to tax under section 28 of the Act. 1.4 That the Ld. CIT(A) has erred in confirming the addition made by the Ld. A.O. in holding that the loan given to M/s. Karan Associates is not for the business purpose. 2. Briefly stated facts giving rise to the present appeal are that case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed. Thereby, the A.O. made addition of Rs. 9,96,360/- in respect of inter....
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.... Page 6. c) Copies of Cases filed against M/S Maikal Fiber Ltd. by M/S Karan Enterprises under section 138 of Negotiable Instrument Act, 1881 at Pages 12 to 51. d) Balance Sheet of the assessee as at 31/03/2009 showing capital of Rs. 88.89 Lakhs at Page 150 of the paperbook. e) Interest debited to P & L A/c Rs. 8,76,802/- Interest credited to P & L A/c (35,800+9,690+4, 19,239) Rs. 4,64,729/- Net Interest Debited Rs. 4,12,073/- at Page 152 6. The Ld. AO has not considered the capital of the assessee is Rs. 88.89 lakhs as against the amount advanced of Rs. 83.03 Lakhs. 7. The AO has disallowed Rs. 9.96 Lakhs as against net interest debited of Rs. 4.12 Lakhs/- 8. The Ld. AO has misunderstood the submission of assessee ....
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....levant time-Said circular provides a test for deciding what is a doubtful debt and weather interest could be included in income in such cases- If the Board has considered it necessary to lay down a general test for deciding what is a doubtful debt, necessary to lay down a general test for deciding what is a doubtful debt, and directed that all ITOs should test such amounts as not forming part of the income of the assessee until realized, this direction by way of a circular cannot be considered as travelling beyond the powers of the Board under section 119- Circular was binding under section 119-1t is also consistent with section 145- It clarifies the way in which these amounts are to be treated under the accounting practice followed by lend....
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....appropriate to recognise revenue only when it is reasonably certain that the ultimate collection will be made. Where there is no uncertainty as to ultimate collection, revenue is recognised at the time of sale or rendering of service even though payments are made by installments." 3. Ld. D.R. opposed the submissions and supported the orders of the authorities below. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. It is stated by the assessee that the money so advanced could not be recovered. He submitted that the authorities below have not considered submissions made by the assessee in right perspective. He submitted that the loans and advances to M/s. ....