ITAT Mumbai Deletes Addition for Deemed Interest on Director’s Loan to Company

Nikhil Suryakant Shah Vs ITO (ITAT Mumbai) Analysis: In the case, the appellant, Nikhil Suryakant Shah, had provided a loan to Wellmac Plastic Pvt Ltd, utilizing his overdraft facility. The Assessing Officer (AO) calculated the deemed interest income on this loan to be taxable. This decision was upheld by the CIT(A). However, the ITAT ruled in favor of the appellant, stating that the interest on the overdraft could not be used to compute notional income, as real income has to be taxed, not notional income. The tribunal referred to the appellant’s substantial surplus funds and the loan tr...