9911796707
TMI Blog2013 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... count. The credit note of Nirma Ltd. also states that the amount is credited to the incentive deposit account. From these facts, it is clear that the amount appearing as security deposit is not in the nature of any amount advanced as loan or deposit by the assessee but is in the nature of receivable. In view of these facts, no disallowance on account of notional interest can be made as far as amount of security deposit is concerned. With respect of advance to Amritlal R. Patel (Rs. 150057/-) and Tarang Plast corporation (Rs.1,35,972) is concerned, the assessee has given a general statement that it is on account of business expediency but has not placed any evidence to substantiate it. The perusal of the ledger account in case of Tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the assessment was framed u/s 143(3) vide order dated 23.12.2009 and thereafter the total income was assessed at Rs.18,28,600/- after disallowing interest u/s 36(1)(iii) of Rs.2,01,950/-. Aggrieved by the order of the A.O. assessee carried the matter before CIT(A). CIT(A) confirmed the action of the A.O. It is against the aforesaid order of CIT(A) the assessee is now in appeal before us. 3. The only effective ground raised before us is with respect to disallowance of interest from Rs.2,01,950/- u/s 36(1)(iii) of the Act. 4. During the course of assessment proceedings A.O. observed that the assessee debited interest of Rs.34,18,865/- to its Profit and Loss Account. He further observed that the assessee has also received interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pedience but this contention has not been proved with any plausible explanation and supporting evidence. In these circumstances, I hold that the AO was justified in making the addition of Rs.2,01,950/- on account of non-charging of interest. The addition is therefore confirmed." Aggrieved by the order of CIT(A), the assessee is now in appeal before us. 5. Before us ld. A.R. submitted that the security deposit NL Account appearing in the Balance Sheet is not in the nature of loan given or advance given. He submitted that the assessee is a distributor of Nirma products. As a distributor if the assessee lifts goods in excess of the limits set, then Nirma Ltd. gives incentive to the assessee for selling more products. The incentives are int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds to the aforesaid two parties. He, thus submitted that the addition made by the A.O. be deleted. 6. Ld. D.R. on the other hand relied on the order of the A.O. and CIT(A). 7. We have heard the rival submissions and perused the material on record. From the copy of the ledger account of security deposit placed on record it is seen that the assessee was entitled to receive incentive of Rs.13,97,394/- for the period April, 2006 to March, 2007 and the same was reflected in the security deposit account. The credit note of Nirma Ltd. also states that the amount is credited to the incentive deposit account. From these facts, it is clear that the amount appearing as security deposit is not in the nature of any amount advanced as loan or depo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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