Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 464 - AT - Income TaxAccrual of income - real income - whether the rate of interest by the assessee on the ICD @ 7.5% p.a. could have been enhanced by the AO or not? - Held that:- There cannot be any enforceable right to receive the income to the assessee over and above what has been agreed amongst the party, because as per the mutual agreement between the parties the rate of interest agreed was 7.25%, which alone could have enforced by the assessee and not what has not been agreed upon. Hence here in this case it cannot be held that any income has accrued to the assessee. In any case the assessee has tried to justify the rate of interest agreed amongst the parties by bringing on record the various rate of interest on FDRs at the relevant time offered by different the bank which was far below than 7.25%, which in our opinion the onus on the assessee if any to prove the reasonableness too has been discharged, which though in our opinion was not required. AO has treated the subscription of ICD as a loan which in our understanding is not a correct way to interpret an ICD, because it is a deposit made by the subscriber of the ICD issued by a company on a fixed rate of interest and hence it cannot be treated as a loan. Thus such an enhancement of notional income as done by the AO cannot be appreciated, because the AO cannot step into the shoes of the businessman to hold that he should have maximum profit from the transaction. There is no real income which has accrued to the assessee and accordingly, the view taken by the Ld. CIT (A) for deleting the addition is upheld and the ground raised by the revenue is dismissed
|