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TMI Blog2010 (8) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... peal by the assessee is directed against order of the learned CIT(A)- XX, Ahmedabad dated 23-04-2010 for assessment year 2007-08 on the following grounds: "1. The learned Commissioner of Income Tax (Appeals)-XX is not justified in confirming notional interest of ₹ 1,56,535 on debit balance of partners. 2. The learned Commissioner of Income Tax is not justified in not following the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges interest on debit balance of partners under the circumstances. The contention of the assessee was not accepted and the AO directed to charge interest of the debit balance of the partners @12% and made addition of ₹ 1,56,535/- u/s 40 (b) of the IT Act. The assessee reiterated the submissions made before the authorities below and referred to the clauses in the partnership through which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act is provision for deduction of the expenditure. Therefore, addition is unjustified. On the other hand, the learned DR relied upon the orders of the authorities below. 4. On consideration of the rival submissions we are of the view that the addition is clearly unjustified and is liable to be deleted. The Hon'ble Gauhati High Court in the case of B & A Plantation and Industries Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase as is reproduced in the impugned order to advise charge interest on debit balance. The assessee pleaded that in this year the partners have decided not to charge any interest on debit balance of the partners. Therefore, the AO was not justified in directing to charge notional interest on the debit balance of the partners. Moreover, the interest is calculated on the debit balance as on 01-04-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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