Notional interest by ito on advance given without interest..

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rohan (Querist)
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06 November 2012 Dear Sir,

Company has Given Advances without interest can ITO Add Notional interest in assessment and demand tax on it?

please provide me case law also if any.

Thank You.

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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06 November 2012 I think no., i mean, if an advance is for any business transaction.., why would AO have any problem with such advance amount... but yes, such advance, if proven to be the loan given, then there can be problems for the company