1. These are four appeals filed by the department and one appeal filed by the assessee. The assessment years involved are 1969-70, 1970-71, 1972-73 and 1974-75. For the assessment year 1972-73 there are cross-appeals.
2. The assessee which is a registered firm, deals in the purchase and sale of land. In the department's appeals, the point involved is common. It relates to varying amounts of additions by way of interest.
The facts in that regard are that the assessee received earnest moneys which remained with it till the sales were completed. In this way, according to the ITO, the assessee was having surplus funds with it on which interest would have been earned by it at the rate of 12 per cent.
Since the assessee did not show the full amount of interest which would have been earned by it on such surplus funds, the ITO made additions, relying upon Section 28(iv) of the Income-tax Act, 1961 ('the Act').
The position would be clear from the following table:Assessment year Surplus fund Interest at Interest Addition the rate of shown by made by Rs. Rs. Rs. Rs.1969-70 6,80,000 81,600 3,480 78,1201970-71 6,75,000 81,000 4,075 76,9251972-73 6,75,000 81,000 6,100 74,9001974-75 7,00,000 84,000 14,737 69,263 3. In appeal, the learned AAC held that until and unless the department could establish that the money remained engaged profitably somewhere to fetch some return, to the assessee-firm, nothing could be included in the total income in the form of 'deemed interest'. He held that the provisions of Section 28(iv) were not attracted.
4. In the appeals before us, both parties pointed out that the provisions of Section 28(iv), dealing with benefit or perquisite, were not attracted. After hearing the learned representatives on both the sides, we are of the view that the learned AAC was absolutely justified in deleting these additions. Nobody can be forced to earn income. It is only where it is established that income was earned and the system of accounting maintained by the assessee is such as does not enable the computation of income that resort can be had to estimate. In the present case, there is no evidence to show that the surplus money earned interest. There is no provision under the Act containing a' deeming provision regarding earning of interest income.
Therefore, even if the assessee's contention that the money remained idle and that no bank account was kept, may appear to be difficult to believe, it cannot be presumed that the money was earning interest. We, therefore, uphold the order of the learned AAC. In this connection, the decision of the Supreme Court in CIT v. Shoorji Vallabhdas & Co.  46 ITR 144 is relevant. Therefore, the departmental appeals fail.
5. In the assessee's appeal, the only question raised relates to the disallowance of 50 per cent of the expenses debited to the profit and loss account. The assessee debited an expenditure of Rs. 12,528 in the profit and loss account for the assessment year 1972-73. The ITO found that the assessee was not maintaining any vouchers nor there was any other evidence to establish these expenses. Therefore, he disallowed 50 per cent of the expenses amounting to Rs. 6,264.
7. After hearing the learned representatives on both the sides, we are of the view that no exception could be taken to the above disallowance since the assessee had not maintained any vouchers nor any other evidence was produced to justify that the expenditure was entirely admissible.
8. In the result, the appeals filed by the department, as well as the appeal filed by the assessee fail and are dismissed.