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TMI Blog2018 (10) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... movable Property Services. They have received 'Interest Free Deposits' from the service receivers. The appellant have been paying service tax on the rent received. It appeared to Revenue that interest free deposits were enjoyed by the appellant and, therefore, it was proposed by Revenue that the Notional Interest earned on the interest free deposits by the appellant should form part of the assessable value of the service provided by them. Therefore, a demand was raised through a show cause notice dated 22.10.2013 wherein it was stated that appellant had received interest free deposits of Rs. 10.75 crores and for the period from April, 2008 to March, 2012 @ 15% per annum appellant received notional interest on the said deposits and, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on perusal of record and going through the finding and decision of this Tribunal in the case of Murli Realtors Pvt. Ltd. (supra), we note that the findings by this Tribunal in the said case which are reproduced below for ready reference are as follows:- "6.2. In the J.K. Investors (Bombay) Ltd. case (supra), an identical question arose I respect of income from house property, whether notional interest on the security deposit taken could be added to arrive at the fair rent of the property and the Hon'ble Bombay High Court held that value of notional advantage, like notional interest, will not form part of actual rent received as contemplated by Section 23(1)(b) of the Income Tax Act. Similarly in Intercontinental Consultants and Technocr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest free advance has been made by the buyer to the manufacturer which would lead to a presumption that it is to the advantage of the manufacturer having influenced the fixation of price as well. We, however, fail to appreciate the submission made on behalf of revenue for drawing a presumption that fixation of price is influenced by such an advance. In this connection, we may refer to the Board's circular of 1998 quoted earlier, clause (iii) of which clearly provides that if there is no difference in the selling price for both categories of the wholesale buyers and there is also "no proof" that on account of advance deposits taken from some buyers, the price charged from all buyers has been reduced, then element of notional interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances were made by the buyers but at the same time it is also not in dispute that such advances had never influenced the price charged by the manufacturers from buyers." 6.3. In the case before us, there is not even an iota of evidence adduced by the Revenue to show that the security deposit taken has influenced the price i.e. the rent in any way. In the absence of such evidence, it is not possible to conclude that the notional interest on the security deposit would form part of the rent. We also do not find any reason for adopting a rate of 18% per annum as rate of interest, which is neither the bank rate of interest for deposits or loan nor the market rate of interest. Adoption of such an arbitrary rate militates against the concept of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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