2008 (12) TMI 759

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..... nterest on loan when the assessee had advance interest-free loan to one Hindustan National Glass Industries Ltd.. It further appears that the assessee was one of the promoter of the said company. The Commissioner of Income Tax (Appeals) in his order held as follows : I have carefully considered the facts of the case and the findings of the Assessing Officer from the audited accounts. I find that as of 31st March, 2005 the assessee s net owned funds was ₹ 6.88 crores which were far in excess of the interest free advance given to M/s. Hindustan National Glass Industries Ltd. a company of which the assessee was a promoter. The assessee did not have any borrowed funds on 31st March, 2005 and as such it was not a case w .....

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..... y about earning of income and therefore business income cannot be assessed entirely on notional basis. In any opinion, none of the provisions of Chapter-IV of the Income Tax Act authorized the Assessing Officer to assess notional of hypothetical income. The addition of the notional interest of ₹ 10 Lacs as business income of the assessee is therefore deleted. In Ground Nos.5 and 6 the assessee has objected to the mode of set off adopted by the Assessing Officer in assessing income from short term capital cases. During the year under consideration the assessee earned short term capital gain of ₹ 7,29,584/- in transaction in shares where security transaction tax was not paid and income was .....

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..... t sitting off short term capital gain with STT against short term capital STT and then allow ofset off of remaining loss of ₹ 4,90,096/- against short term capital gain without STT. The mode ofset off adopted by the A.O. shown that be accepted in principle that short term capital loss with STT can be legally set off against short term capital gain without STT. According to the assessee, the chronology for the set off by the A.O. was contrary to chronology adopted by the assessee, only because the assessee s mode resulted in concessional rate of the tax being applied to higher amount of short term capital gain which resulted more tax benefit to an assessee. On perusal .....

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