TMI Blog2024 (4) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... pay interest - CIT(A) deleted addition HELD THAT:- As decided in M/S. SHRIRAM PROPERTIES LIMITED [ 2023 (4) TMI 375 - ITAT CHENNAI] Tribunal accepted the contentions of the assessee that the above said income did not accrue to it. Thus the notional income credited to the profit and loss account cannot be said to have accrued to the assessee, when there is no contractual obligation to pay the same. In the instant case, it was not shown to us by the revenue that there existed a contractual obligation to collect interest from the debtors. Thus we hold that the notional interest income credited by the assessee to the profit and loss account as per the requirement of Indian Accounting Standard has not actually accrued to the assessee and hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly a book entry and it did not really accrue to the assessee at all, it excluded the above said amount from Net profit while computing the total income for the purpose of Income tax Act. 3. While processing the return under section 143(1) of the Act, the CPC did not allow exclusion, as it was not a deduction allowed under any of the provisions of the Act. Accordingly, the total income of the assessee was enhanced by the amount of Rs. 2.76 crores mentioned above. The assessee challenged the above said addition made by CPC by filing the appeal before the learned CIT(A). 4. In the meantime the assessee also filed a rectification petition under section 154 of the Act before learned CPC. The said rectification petition was rejected by learned CP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notional interest credited to the Profit and Loss account as per the requirement of Indian Accounting Standards cannot be considered as real income as there is no contractual obligation for the debtor to pay interest. Accordingly, it was contended that the Ld CIT(A) was justified in deleting the addition of notional interest. 8. We noticed that the Chennai Bench of the Tribunal has examined an identical issue in the case of M/s. Shriram Properties Limited (ITA No. 431/Chny/2022 dated 20.3.2023). In the above said case the assessee had credited its Profit and Loss account with notional guarantee commission as per the requirement of Indian Accounting Standard. The question as to whether the above said Notional Guarantee Commission could be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has passed notional entries in the books for better representation of financial statements, it cannot be said that income accrues to the assessee which is chargeable to tax for the impugned assessment year. Therefore, we are of the considered view that on this issue it cannot be said that there is an error in the order of the Assessing Officer. 9. The Ld D.R, however, placed heavy reliance on the intimation issued under section 143(1)(a) of the Act. We noticed that the Coordinate Bench of Tribunal has held that the notional income credited to the profit and loss account cannot be said to have accrued to the assessee, when there is no contractual obligation to pay the same. In the instant case, it was not shown to us by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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