Basudebpur Uttarbarh Samabay Krishi Unnayan Samity Limited Vs ACIT (ITAT Kolkata)
Notional Interest Cannot Be Added Where No Income Earned: ITAT Kolkata Deletes Proportionate Interest Addition and Allows 80P Relief
The Kolkata ITAT allowed the assessee’s appeal for AY 2015-16 and deleted the addition made on account of proportionate interest allegedly earned on excess investments beyond capital and reserves. The Assessing Officer had computed a notional interest of ₹4.86 lakh by assuming that the assessee earned interest on investments exceeding its capital and reserve surplus, and denied deduction under Section 80P(2)(a)(i) on that basis.
The Tribunal examined the profit and loss account and found that the assessee had not actually earned any such interest income. It held that the Assessing Officer proceeded purely on an अनुमान (assumption) by calculating hypothetical interest on proportionate basis without any real accrual or receipt. Since no such interest was reflected in the books, the very foundation of the addition was held to be incorrect.
Accordingly, the entire addition was deleted and the appeal was allowed, rendering the question of denial of deduction under Section 80P academic.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal filed by the assessee against the order dated 24.07.2024, passed by the ld.Addl./JCIT(A)-13, Mumbai, for the assessment year 2015-2016.
