TMI Blog2002 (7) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the records including the w/s of the learned authorised representative of assessee, whichever have been furnished on record. 4. In all the above 5 appeals of Revenue, the Department has raised the sole common substantive ground disputing the deletion by CIT(A)/Dy. CIT(A) of addition on account of interest income on debtors as Rs. 54,100, Rs. 79,000, Rs. 92,403, Rs. 1,06,595 and Rs. 83,450, respectively. 5. First we take up ITA No. 1757/Jp/94 being for asst. yr. 1991-92 for the sake of convenience as there is elaborate written submission of the learned authorised representative of assessee furnished on record in this appeal. The learned Departmental Representative of Revenue has contended that the assessee has not been maintaining bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of F.Y. 1987-88 in the debtors as on 31st March, 1988, for the purpose of arriving at debtors as on 1st April, 1988. He has contended that the AO calculated interest income for F.Y. 1988-89 (asst. yr. 1989-90) @ 18 per cent per annum on such amount. He has contended that thereafter the AO worked out debtors by adding this calculated/estimated interest for F.Y. 1988-89 in the amount of debtors estimated as on 1st April, 1988, and thereafter estimated interest for asst. yr. 1989-90 in the same manner; and the AO has done working on estimate basis by similarly increasing the amount of debtors every year by the amount of notional interest calculated by him. It has been contended that the AO has worked out the addition of interest (notional inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of the debtors have already been written off as bad debts during financial year 1988-89. It has been contended that the AO has not considered the assessee s claim that some of the debtors were already barred by limitation, as more than three years have already passed, which is evident from the list of debtors as on 31st March, 1985, and most of the debtors appearing in the list of debtors as on 31st March, 1988, are the same as are there is the list of debtors as on 31st March, 1985. It has been contended that when it is legally not possible to recover the principal amount, there is no question of interest. It has also been contended that some of the debtors were already realised, and thus non-existent as is evident from copies of affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able income, in the hands of the assessee. It has been contended that the AO has not pointed out any evidence to support accrual of interest to the assessee, nor has he examined any debtor to verify the amount advanced and the receipt of interest. It has been contended that the addition on account of notional income (interest), is not justified. He has relied on Roop Chand vs. Asstt. CIT 27 Tax World 27 (Jp), CIT vs. A. Raman (1968) 67 ITR 11 (SC). It has been contended that the estimation of interest is hypothetical and not justified in law. 10. We have considered the rival contentions, the relevant material on record as also the cited decisions. In 27 Tax World 27, certain additions were made representing unexplained investment in advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was unable to return the same to the debtors and, therefore, there was no question of charging interest from debtors whose goods could not be returned even against the payment of loans. The CIT(A) has also considered therein the contention raised on behalf of the assessee-appellant that the debts, including pawned debtors, had become bad and time-barred because the same were not refunded within three years nor were renewed. With the above observations, the CIT(A) held that the AO made the addition in respect of interest on debtors, only on estimate and on the basis of conjunctures. The CIT(A) hold the addition to have been made on imaginary grounds and in turn, not sustainable. Considering all the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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