TMI Blog2009 (11) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... als by this common order. 2. The identical issues in these three appeals are stated below:- a) Disallowance of interest claimed in the Finance division of Chandra Transports for the reason that the investment made from the loan borrowed did not yield income. b) Addition of notional interest of ₹ 10,86,717/- on the Sundry debtors balances in the business concern viz., Coastal Packagings. 3. The assessee is the proprietor of various concerns viz., M/s Coastal Packagings, M/s Chandra Transport, White gold ginning mills and also the Managing director in M/s Chaitanya Packagings Pvt. Ltd and M/s Tulasi Seeds (P) Ltd. M/s Chandra Transport has got two divisions viz., Finance division and truck division. The return of income pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interest from the sundry debtors. The AO noticed that the sales invoice contains a clause to charge interest @ 18% in case of late payment. The AO also noticed from the assessment record of earlier year that the assessee had filed legal claims on some parties and such claim included interest claim also. Accordingly the AO took the view that the assessee could collect interest @ 24% p.a. on the outstanding balances due from Sundry debtors. Since the number of debtors were more, the AO worked out average sundry debtors balance and worked out interest at 12% for assessment year 2004-05 and at 18% for other two years and added the same to the total income, by stating that the amount equivalent to the interest so calculated is disallowed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar in nature and hence we think it proper to set aside the above said issue relating to this year also to the file of the assessing officer, in order to enable him to take uniform view in all the years. We order accordingly. Needless to mention, the assessee should be given necessary opportunity of being heard to explain his case. 5. The next issue relates to the disallowance of interest payment by calculating notional interest on the Sundry debtors balance. The facts relating to this issue have been narrated earlier. Though the terms and conditions printed on the sales invoices contained an interest clause, the submission of the assessee is that he has not collected any interest from the debtors nor does it give right to collect s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that actually loan had been granted to Managing Director or any other person on interest, or that interest had actually been collected and the collection of the interest was not reflected on the accounts. The finding of the ITO is that the assessee ought to have collected interest. In other words, in the view of the ITO is that the assessee ought to have collected interest. In other words, in the view of the ITO which has been accepted by the Tribunal, the assessee as a good business concern should not have granted interest free loan, or should have insisted on payment of interest. If the assessee had not bargained for interest, or had not collected interest, one fails to see how the IT authorities can fix a notional interest as due, or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the above, we direct the AO to delete the notional interest in all these three years. 6. The only remaining issue in the appeal filed for assessment year 2003-04 relates to the disallowance of bad debts for the reason that the assessee did not prove that the debt has really become bad. The law is now well settled now for claiming a debt as a bad debt u/s 36(1)(vii)., i.e., it is enough if the debt is written off in the accounts of the assessee. In the year under consideration, the AO is otherwise satisfied with the conditions prescribed for the claim of bad debt. There is no dispute with regard to the fact that the assessee has written off the debt in his accounts. Hence the claim of bad debt made by the assessee is in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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