TMI Blog2016 (11) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... onal basis which was not the dispute from the facts of the case. In this connection, we rely in the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Rungamatee Trexim (Pvt) Ltd. [2008 (12) TMI 759 - CALCUTTA HIGH COURT] Respectfully following the decision of Hon'ble jurisdictional High Court we reverse the orders of Authorities Below and we allow ground of assessee’s appeal. - ITA No. 1818/Kol/2010 - - - Dated:- 28-9-2016 - Shri Waseem Ahmed, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member By Appellant : Shri D.S.Damle, FCA By Respondent : Shri Provash Roy, JCIT-SR-DR ORDER Per Waseem Ahmed, Accountant Member This appeal by the assessee is against the order of Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster concern without interest was not correct. 04. For that the Appellant Company craves leave to submit additional grounds and/or amend or alter the present grounds either before or during the course of the appellate proceedings. Shri D.S. Damle, Ld. Authorized Representative appeared on behalf of assessee and Shri Provash Roy, Ld. Senior Departmental Representative appeared on behalf of Revenue. 2. The common inter-connected issue raised by assessee in Ground No.1 and 2 are that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of interest of ₹ 5,76,231/- on account of interest free loan given to its associate company. 3. Facts in brief are that assessee is a Private Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted paper book which is running pages 1 to 46 and cited case law. Ld. AR of assessee stated that loan was given to associate enterprise out of its own surplus fund and which is as on 31.03.2007 of the assessee is of ₹ 1,83,59,374/- and interest free advance given to its associate concern is of ₹ 45,01,820/-. He also submitted that AO in the instance case, has worked out the interest income on the advance given to the associate concern on notional basis, therefore the act of the AO is beyond the provision of law. Had the AO disallowed the interest expense rather charging interest income on the advance given on the notional basis then the situation would have been different in so far as to make the disallowance on the advance g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s utilized by the associate concern and the interest pertinent to that advanced money. But the lower authorities erred in charging the interest income on notional basis. In this connection we rely in the case law of CIT vs. Rungamatee Trexim (Pvt) Ltd. in GA No. 3796 of 2008 dated 09.12.2008 cited by the ld. AR. The relevant operative portion of the said judgment is reproduced below:- We have perused the order passed by the Commissioner of Income Tax (Appeals) and the order passed by the learned Tribunal. It appears that the question arose in respect of notional interest n 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a settled proposition of law that in what manner the assessee should conduct his business is best left to the discretion of the assessee and the Assessing Officer cannot sit in the arm chair of the businessman to decide, what should have been the income earned. If an assessee does not bargain to earn income then an Assessing Officer cannot compel him to earn such income and cannot resume accrual of income, based entirely on his subjective notions as what constitutes fare return on investment. In business there cannot be certainly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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