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2020 (12) TMI 166 - AT - Income TaxAddition of notional interest income - CIT(A) made addition of interest income on notional basis on different aspects holding that if undisclosed income declared by assessee would have been available in the books of accounts of assessee, notional interest of approximately 14% of average interest rate of such available unaccounted “on money”, the assessee would have been earned interest - HELD THAT:- CIT(A) made addition of ₹ 70 lakhs on different aspect by taking view that undisclosed income would have been available in the books of the assessee. CIT(A) presumed that if ₹ 5 crore were available with the assessee, the notional interest of Rs.@14% on such average account, the assessee must have earned ₹ 70 lakhs and thereby added ₹ 70 lakhs. Assessee vehemently submitted that there is no concept of notional income and that no addition can be made or no presumption basis that assessee would have earned notional interest on surplus available with them. If interest free funds are available, it is the choice of businessman/assessee to arrange his business affairs. The Hon'ble Gujarat High Court in CIT Vs. Arihant Avenue Credit Ltd. [2014 (10) TMI 790 - GUJARAT HIGH COURT]held that no addition on account of notional interest is warranted. Similarly, the Hon'ble Delhi High Court in Shivnandan Buildcon (P.) Ltd.[2015 (5) TMI 192 - DELHI HIGH COURT]also held that in absence of any specific provisions under Income Tax Act, no notional interest is warranted. We are conscious of the settled position in law that the Income Tax Officer (ITO) cannot decide affairs of businessman as to how the businessman should incur the expenses or earn the interest. It is the sole discretion of businessman to manage its affairs and not the ITO. Considering the aforesaid facts and the case laws referred through, we are of the view that no addition on account of notional interest in absence of any co-gent evidence, against the assessee.
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