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TMI Blog2020 (5) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee company is engaged in the business of import export of machinery equipment and materials including technical consultancy for manufacturing electrical components. As per assessment order, the assessee company did not carry any business activity of sale/purchase during the year except for earning of interest income from other sources. The return of income was filed declaring an income of Rs. 36,200/-. During the course of assessment proceedings, the Assessing Officer (AO) noted that the assessee company had incurred a net loss of Rs. 8,45,87,299/-. The AO further noted that the assessee company had squared up an amount of Rs. 33,50,000/- during the year on account of advances given to M/s. Liquid Investment and Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year relevant to the assessment year under consideration and, therefore, the provisions of section 68 of the Act could not be applied. 2.2 Now, the Department is in appeal before the ITAT challenging the deletion by the Ld. CIT (A). 3.0 The Ld. CIT (DR) submitted that the Ld. CIT (A) was not justified in deleting the disallowance of Rs. 5,02,500/- on the ground of commercial expediency because the assessee had failed to discharge the primary onus cast upon it to prove that providing financial assistance to the group company by way of interest free advance was the business object of the assessee company. The Ld. CIT (DR) further submitted that the assessee had not substantiated the business purpose even before the Ld. CIT (A) and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c provision in the Act, notional income on advances could not be brought to tax. 4.1 With respect to the issue of share application money, the Ld. Authorised Representative submitted that the Ld. CIT (A) has given a categorical finding that the share application money had been received in the preceding assessment year and, therefore, the same could not have been brought to tax during the year under consideration. 5.0 We have heard the rival submissions and have also perused the material on record. As far as the issue of charging notional interest income is concerned, it is seen that the AO has brought an amount of Rs. 5,02,500/- as deemed income u/s 69B of the Act. Section 69B reads as under:- "69B. Amount of investments, etc, not fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provision of section 36(1)(iii) of the Act. Thus, the fact remains that the AO has proceeded to bring to tax notional income without there being any machinery provisions in the Act. We are of the considered opinion that the assesee's case is covered in its favour by the judgment of the Hon'ble Delhi High Court in the case of Shivnandan Buildcon (P.) Ltd. vs. CIT (supra) wherein the Hon'ble Delhi High Court had held that notional income on advances could not be brought to tax in absence of any specific provision of the Act. The order of the Hon'ble Delhi High Court in the case of Punjab Stainless Steel Inds Vs CIT (supra) does not come to the aid of the department because in that case the AO had made disallowance out of interest claime ..... X X X X Extracts X X X X X X X X Extracts X X X X
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