TaxTMI 
TaxTMI 
2018 (11) TMI 482
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....Associates. 1.1 That the addition of Rs. 9,96,360/- 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') w....
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....ssee from 01/04/2005 to 31/03/2010 at Pages 6 to 11. i. Copy of accounts for year ended 31/03/2006 showing interest earned of Rs. 71,561/- at 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 ....
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....st on sticky advances of a banking company- Interest credited to suspense account excluded from income- Assessment was made on the basis of CBDT Circular No. F. 201/21/84 'ITA-Il,dt. 9th Oct., 1984, which was applicable at the relevant 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 beyo....
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....ty to assess the ultimate collection with reasonable certainty is lacking at the same time of raising any claim, e.g., for escalation of price, export incentives, interest etc., revenue recognition is postponed to the extent of uncertainty involved. In such cases, it may be 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 th....