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TMI Blog2015 (9) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. ii) Rs. 8,32,987/-:- The ld CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs. 8,32,987/- out of interest payment and adding the same in the income of the appellant. The disallowance so made by the A.O. and confirmed by the ld CIT(A), is contrary to the provisions of law and facts of the case. Hence, the same kindly be deleted in full. (iii) The ld A.O. further erred in law as well as on the facts of the case in charging interest U/s 234A and 234B of the Act. The appellant totally denies its liability of charging any such interest. The interest so charged, being contrary to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of manufactured drugs etc.. The medicines have expiry date and the food and drug department has to keep a close watch on such record and activities. The Assessing Officer asked various questions about details of expired and obsolete drugs/medicines and other details, which the assessee deliberately did not produce. The assessee's trading results are as under:- A.Y. - Sale - G.P. - %age N.P. 2006-07 6,12,57,852/- 2,14,66,690/- 35.04% 4.30% 2007-08 7,00,71,729/- 2,32,47,783/- 33.18% 3.81% While explaining the lower G.P., the assessee did not give proper reasons for reduction in trading margins and accepted that it was not possible for him to give further details, which is mentioned by ld. AO.. 6. Before the ld CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest to bank on the bank overdraft and also paid interest to family members whereas on the other hand, he also made interest free advances totaling to Rs. 9,41,558/-. The figure of such subjected interest free advances as alleged by the A.O. has not been mentioned in the assessment order however, by making a reverse working @ 12% interest with reference to the total amount of interest of Rs. 8,32,987/-, the total amount of such advances appears to be Rs. 69,41,558/- to certain parties, mentioned at Pg. 5 of the assessment order on which no interest was charged. The Assessing Officer accordingly computed interest @ 12% on day to day basis on such advances and also alleged that had the assessee diverted these interest free advances to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer did not establish any nexus between diversion of interest bearing funds to interest free advances which have been objected on. There can be no tax on notional income. Reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT Vs. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC). Alternatively, it is submitted that the facts itself prove that no disallowance/addition of notional interest could have been made inasmuch as the assessee was having a huge interest free funds available in the form of partners capital amounting to Rs. 85,12,670/-. As against the availability of such, only Rs. 69,41,558/- as interest free. Therefore, the assessee had surplus interest free funds far in excess by Rs. 15,71,112/- (Dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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