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2020 (12) TMI 95 - AT - Income TaxAccrual of income - Notional interest income - deployment of funds by the assessee by way of investment in the OCDs - advancing of interest-free unsecured loan - HELD THAT:- Admittedly, there is no case made out by the Assessing Officer that the assessee has received or has any right to receive any income qua the amounts invested/advanced to India Best Buy Pvt. Ltd. which is over and above the amount declared by the assessee. The finding of the CIT(A) in this regard, which we have extracted above, clearly shows that there is no material led by the Assessing Officer to point out that the assessee has actually received or accrued any income corresponding to the interest in question. CIT(A) made no mistake in relying on the case of Shivanndan Buildcon Pvt. Ltd. vs CIT [2015 (5) TMI 192 - DELHI HIGH COURT] to say that the AO is not entitled to bring to tax any notional interest income without demonstrating that the assessee had, in fact, received such interest income or that the concern to whom the loan was given had, in fact, paid any such interest to the assessee. It is a trite law that income tax cannot be levied on the ipse dixit of the AO, and, that too on a hypothetical income, which is a step away from real income. Thus, impugned addition computed by the Assessing Officer is merely hypothetical and notional and has been rightly set aside by the CIT(A). As noted by the CIT(A) that the assessee is a wholly owned subsidiary of Oleander Real Estate Private Limited dealing in real estate business. No doubt, the CIT(A) has referred to the investment agreement between the assessee and M/s India Best Buy Private Limited dated 31.3.2011 and such a reference is conspicuous by its absence in the assessment order. Be that as it may, the same does not turn much, inasmuch as the analysis of the nature of the arrangement, being a transaction carried out in the course of the business activity has been consistently canvassed by the assessee, and also noted so by the lower authorities. Thus, the plea of the learned DR to effect that such plea was not before the lower authorities, is not merited. Considering the entirety of circumstances, on this aspect of the matter also, the order of learned CIT(A) is well-founded and does not require any interference from our side. - Decided against revenue.
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