TMI Blog2021 (1) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... charged any interest against the loans of these two companies. This findings of fact has not been assailed before us. - CIT(A) has rightly deleted the notional interest. Therefore, the ground raised by the revenue is dismissed. Write off of irrecoverable principal amount of loan which was claimed u/s 36(1)(vii) read with Section 36(2) - HELD THAT:- CIT(A) noted that in this assessment year the assessee in addition to its business of manufacturing of tea, fertilizer etc, had also carried on the business of granting of loans and ICDs. The ld. CIT(A) noted that the interest on loans was held assessable under the head profits and gains of business and the assessee had written off the principal amount of loans as also the unrealized amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies / persons by the assessee. 4. Brief facts of the case as noted by the Assessing Officer is that the assessee in the earlier assessment years has reflected notional interest under income from other sources which were in respect of interest free loans and advances given by the assessee to certain companies / persons. According to Assessing Officer, the assessee had submitted before him as on 31.03.2012, the following loans as appearing in books of account out of loans on which notional interest was being charged in the earlier assessment years: M/s Oxides Specialities Ltd. ₹ 5,30,93,000/- M/s Gujarat Carbon Industries Ltd. ₹ 1,84,96,925/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. The direction of the CIT(A) to the AO to charge notional interest for that assessment year was reversed by the Jurisdictional ITAT, E Bench vide order dated 21.07.2005 in ITA No. 980/Kol/05 Kolkata wherein it was held that no amount can be treated as notional interest in a case where interest has not been charged by the assessee. For the next AY 2002-03, similar action was again carried out by the AO in charging the notional interest income which was deleted by the jurisdictional CIT(A) following the above ruling of the ITAT. No further appeal was preferred by the Department on this ground. The issue of notional income has been deliberated on a number of occasions by various courts such as in the case of CIT vs. Goyal M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal loan amount from two companies i.e. M/s Oxides Specialities Ltd. and M/s Gujarat Carbon Industries ltd. We also take note that these companies are incurring huge losses and could not pay principal amount as well as interest. So, the assessee has stopped charging interest on such loans and has not reflected it in its books. Thereafter, the ld. CIT(A) has relied upon the order of Tribunal in assessee s own case for AY 2001-02, 2010-11 and 2011-12 for giving decision in favour of the assessee. We note that the ld. CIT(A) has rightly taken note of the decision of Hon ble Delhi High Court in the case of CIT vs. Goyal MG Gases P Ltd. (163 Taxman 541) wherein the Hon ble High Court relied upon the decision of the Hon ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee preferred an appeal before the ld. CIT(A) who deleted the addition held as under: 5.2. I have considered the submission of the A.R of the appellant in the backdrop of the assessment order. I find that this issue is already a covered matter in favour of the appellant supra. In the appellant s own case for the assessment year 2002-03 similar issue had come up before the Hon ble ITAT, Kolkata in ITA NO. 706/Kol/2008 supra. In this assessment year the appellant in addition to its business of growing and manufacture of tea, fertilizer etc. had also carried on the business of growing loans and ICDs. The interest on loans was held assessable under the head profits and gains of business. The assessee had written off the principal amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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