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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 ..... ns in the Act. 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. [ 2015 (5) TMI 192 - 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 Punjab Stainless Steel Inds Vs CIT. [ 2010 (5) TMI 53 - HIGH COURT OF DELHI] does not come to the aid of the department because in that case the AO had made disallowance out of interest claimed as deduction u/s 36 (1)(iii) of the Act. Since there is no specific provision in the Income Tax Act for bringing to tax notional interest as income on loan/advances to sister concern, we are unable to agree with the submission of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i S.S. Rana, CIT, DR ORDER PER SUDHANSHU SRIVASTAVA, JM: This appeal is preferred by the department against order dated 9.12.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-3, Delhi {CIT (A)}. The appeal pertains to assessment year 2012-13. 2.0 Brief facts of the 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 ₹ 36,200/-. During the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deduction either on the ground that the rate of interest was unreasonably higher or that the assessee had himself charged a lower rate of interest. The Ld. CIT (A) also deleted the addition on account of share application money by observing that in the instant case no share application money has been received during the financial 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 ₹ 5,02,500/- on the ground of commercial expediency because the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance was placed on the judgment of the Hon ble High Court of Delhi in the case of Shivnandan Buildcon (P.) Ltd. vs. CIT reported in (2015) 233 taxman 297 (Delhi) for the proposition that where an assessee had given advance to its sister concern out of its own funds and no interest had been charged for this loan, in absence of any specific 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 consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfactory by the AO. However, in the present case, addition has been made on account of notional interest. It is not the case of the AO that the loan advanced to the sister concern was not recorded in the books of accounts. It is not also the case of the AO that interest expenditure claimed as deduction by the assessee should have been disallowed under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the share application money had not been received during the year under consideration but during the preceding assessment year. We also note that the assessment proceedings for assessment year 2011-12 were subsequently reopened u/s 147 of the Act and order u/s 147 read with section 143 (3) of the Act was passed on 10.4.2019 wherein the impugned sum of ₹ 87 crores has been added to the income of the assessee in assessment year 2011-12. Since this impugned amount has already been brought to tax in assessment year 2011-12 and since the impugned amount does not relate to this year under appeal, we agree with the findings of the Ld. CIT (A) on this issue and uphold his order of deleting the said amount. The related grounds stand d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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