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TMI Blog2024 (1) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of 10% per annum, subject to its financial position and profitability, on the Loan from the date of disbursement of the Loan, after deduction of applicable Tax deduction at source. Any unpaid interest at the last business day of financial year shall be treated as loan to the borrower on first business day of next financial year. In event of amalgamation, merger or demerger or takeover of borrower or any other change in its management the liability to pay interest shall cease and lender shall not be entitled to any interest from the appointed date for such event . As M/s.Sanman Holdings Private Limited to whom the assessee has advanced the loan was amalgamated with M/s. Tanti Holdings Private Limited, no interest was liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The brief facts of the case are as under: 3.1. The respondent-assessee who is an individual was engaged in business of generation of power and energy. The Assessment Order under Section 143(3) of the Act was passed on 29.03.2014 for the year under consideration assessing the total income at Rs. 17,54,953/-. The Principal Commissioner of Income Tax- Rajkot by invoking the jurisdiction under Section 263 of the Act set aside the assessment order and remanded the matter back to the AO as the interest on advances given by the assessee to M/s. Sanman Holding Private Limited was not offered to tax for the year under the consideration but in the Assessment Year for A.Y. 2010-11, such amount was offered to tax. The assessee preferred the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanman Holdings Private Limited but in view of the loan agreement of the assessee with M/s. Sanman Holdings Private Limited, no interest is provided or payable from 01.04.2010, the CIT (A) after considering the submissions made by the assessee in relation to the notional interest on the ground that the interest income on the loan given by the assessee did not accrue, nor did the borrower provide for any such interest as payable to the assessee in the books of accounts, allowed the appeal deleting the addition made on account of notional interest. 3.5. The Revenue being aggrieved filed the appeal before the Tribunal. The Tribunal after considering the submissions made by both the sides, held as under: "5. The Department is in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. Further, Ld. CIT(Appeals) also observed that the assessee did not utilise any interest- bearing loans to advance the sum of 350 crores to M/s Sanman Holdings Private Limited. Therefore, the Department has not brought on anything on record to demonstrate that the interest income sought to taxed had accrued to the assessee nor has the Revenue brought anything on record that any interest income was in fact received by the assessee. It is a well-settled principle of law that income cannot be taxed in the hands of the assessee, on purely "notional" basis. Either the income should accrue to the assessee, as per terms of agreement or otherwise, or else the same should have been received by the assessee. In the instant fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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