Notional Interest which is part of Purchase price is business income

AGR Matthey of Western Australia Vs. ADIT (ITAT Delhi) From the records it can be seen that there is no interest credit, since within a day or two of usance of letter of credit by PEC Ltd’s bank to the Assessee, letter of credit stands discounted by the Assessee with ANZ Bank of Australia. The cost of discounting letter of credit is identical and equal to the notional interest in respect of the letter of credit itself. The Assessing Officer also admits in the assessment order that interest in this case is not interest simplicitor, i.e., it does not arise out of a loan liability. The inte...