1990 (6) TMI 83

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....leted the interest amounting to Rs. 40,517 made by the ITO. This is the grievance of the Department. 3. The ITO noticed that the assessee's interest income has fallen this year. One Taraben was entitled to 60 per cent profit in the assessee-firm and this lady became a partner in one Vandana Silk Mills to which the assessee had given a loan. Before she became a partner there, the interest which w....

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....had adopted the device of reducing its profits by lending money to the loss making concern at a lower rate of interest. He, therefore, added the aforesaid amount as interest difference. 4. Before the AAC it was argued that the ITO cannot decide the rate at which interest should be charged by a creditor to the debtor and the interest which has been added by the ITO is nothing but a hypothetical i....