TMI Blog1977 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid sale of Rs. 10,92,722. This g.p. rate is better that what the assessee had disclosed in all the earlier years. The authorities below have also given the finding that the g.p. rate of 6.5 per cent is reasonable. Yet under some accounting misconception, an addition of Rs. 11,387 has been sustained by the learned AAC. This is what he has observed about this addition in his order: "However, considering that the amount of Railway freight, an item of Trading a/c if considered in the Trading a/c, the g.p. rate of 6.5 per cent can be considered as reasonable and the amount so debited to P L a/c will go to reduce the profit. Therefore, this amount of Rs. 11,387 will be sustained to be included in the total income and the addition of Rs. 18,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, the contention of the assessee is sound. When in fact, the assessee did not earn any income from the aforesaid transaction and nothing accrued or arose to him, the ITO could not create a notional income, where there was none. The addition of Rs. 4,000 cannot, therefore, be sustained. Similar is the position with regard to the addition of Rs. 2,000 made on account of interest. Here again the assessee did not charge any interest from the persons to whom it had advanced the money. There was no contract also for charging interest. Nothing, therefore, accrued and arose to it on account of interest. It is not open to the Departmental Authorities to presume income in a case on a notional basis, when the assessee itself choses not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said minor son is to be clubbed with that of the partner in accordance with s. 64 of the IT Act, 1961, the income which accrues to the minor is in fact not the income of the partner, nor does the statute deem it to be so. What the statute provides for is that where a minor is admitted to the benefits of he partnership in a firm where his father or mother is a partner, the income of such a minor will be assessed in the hands of the parent. Sec. 40(b) bass the allowance of only such interest as is paid to the partner. It does not bar the allowance of interest paid to a minor child of a partner even though the income of the such a minor is to be clubbed in the hands of the assessee under s. 64. The income of the minor neither ceases to be his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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