1983 (8) TMI 81

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....ppeal she did not borrow any funds on which she might have been required to pay any interest. It was her own capital which was used in the business. She, however, did not charge any interest on the advances made to Shri Vishwanath Prasad Didwania, her father-in-law and Didwania Industries in which her husband and father-in-law were interested as partners. The ITO was of the view that since she was....

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....s hands and the income which he could have, but had not earned, was not taxable as income accrued to him. The Madras High Court in CIT v. Motor Credit Co. (P.) Ltd. [1981] 127 ITR 572 had observed as under: "... Where no income has resulted, it cannot be said that income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. Even if the assess....

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....rned interest also on each advance, is also not tenable. It would amount as if she had withdrawn the amounts to the extent they had been advanced to her father-in-law and Didwania Industries out of the money-lending business. A somewhat similar situation had arisen in the case of Sir Kika Bhai Premchand v. CIT [1953] 24 ITR 506 (SC). In this case the assessee was a dealer in silver and shares. He ....