https://www.taxtmi.com/caselaws?id=795327 A bona fide change from the mercantile to the cash system for interest on loans is permissible where made for a legitimate purpose, consistently followed, compliant with applicable income-computation standards, and properly disclosed. Borrower financial distress and non-payment of interest may support the legitimacy of adopting cash accounting, particularly where accrual-based taxation would impair cash flow. In the absence of evidence of tax avoidance, repeated switching of accounting methods, or non-disclosure, unpaid interest is not taxable on an accrual basis under the valid cash method. en-us Mon, 08 Jun 2026 00:00:00 +0530 Tue, 21 Jul 2026 08:32:10 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=795327 A bona fide change from the mercantile to the cash system for interest on loans is permissible where made for a legitimate purpose, consistently followed, compliant with applicable income-computation standards, and properly disclosed. Borrower financial distress and non-payment of interest may support the legitimacy of adopting cash accounting, particularly where accrual-based taxation would impair cash flow. In the absence of evidence of tax avoidance, repeated switching of accounting methods, or non-disclosure, unpaid interest is not taxable on an accrual basis under the valid cash method. Case-Laws Income Tax Mon, 08 Jun 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=795327