VIMAL CHAND v. INCOME TAX OFFICER - 1985-LL-0121-4

Citation	1985-LL-0121-4
Appellant Name	VIMAL CHAND
Respondent Name	INCOME TAX OFFICER
Court	ITAT
Relevant Act	Income-tax
Date of Order	21/01/1985
Assessment Year	1980-81
Judgment	View Judgment
Keyword Tags	interest chargeable • interest income • estimate basis • deemed income
Bot Summary:	In the course of the assessment proceedings the ITO found that the assessee did not charge interest from the debtors against whom an amount of Rs. 2,53,312 has been shown. Since the assessee derived interest income of only Rs. 2,574 the ITO added Rs. 15,000 as income receivable from the above debtors. The assessee is aggrieved and has come up in appeal before us. Counsel of the assessee and Shri K. K. Sharma, ld. Counsel of the assessee filed a complete detail of the debtors. These debts have arisen out of the trading activities and there being no such provision for charging interest on trade debts no deemed income can be assessed as interest chargeable from these trade debts. We do not have any hesitations deleting the addition made by the ITO o n estimate basis when there is no actual income due to the assessee on the trade debts.

In this appeal main ground is regarding addition of Rs. 15,000 sustained by AAC for asst. yr. 1980-81. In course of assessment proceedings ITO found that assessee did not charge interest from debtors against whom amount of Rs. 2,53,312 has been shown. Since assessee derived interest income of only Rs. 2,574 ITO added Rs. 15,000 as income receivable from above debtors. On appeal before AAC it was contended that these were trade debtors against which no interest was chargeable. AAC, however, did not accept claim and upheld addition. assessee is aggrieved and has come up in appeal before us. After hearing Shri B. B. Khare, ld. counsel of assessee and Shri K. K. Sharma, ld. Departmental Representative, we are of view that assessee is to succeed on this point. ld. counsel of assessee filed complete detail of debtors. These debts have arisen out of trading activities and there being no such provision for charging interest on trade debts no deemed income can be assessed as interest chargeable from these trade debts. ITO himself accepted this position and did not assess such income in asst. yr. 1981-82. We, therefore, do not have any hesitations deleting addition made by ITO o n estimate basis when there is no actual income due to assessee on trade debts. next ground regarding charging of interest under s. 217(1A) is consequential to first ground. It is accordingly dismissed. In result, appeal is allowed. *** VIMAL CHAND v. INCOME TAX OFFICER

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