TaxTMI 
TaxTMI 
2014 (4) TMI 32
X X X X Extracts X X X X
X X X X Extracts X X X X
....he rival submissions and have perused the record of the case. A perusal of the statements regarding accounting of interest in the case of Sikandarabad unit and Dariabad unit would reveal that assessee had accounted for interest and only in such years where it had received the amounts against the interest accrued to it but did not treat the interest income in those years where there was no recovery. This treatment was opposite to the system of accounting viz mercantile system of accounting regularly followed by the assessee. In mercantile system of accounting, the income accrues as soon as it has become due and it cannot be postponed to subsequent years based on the recovery against this amount. Specific statutory provisions are there in the statute to meet such contingencies. The real income theory has no role to play once the income had accrued to the assessee. In this regard, we may refer to the decision in the case of ITAT Delhi Bench in the case of Poysha Oxygen (P) Ltd vs Dy. CIT, 91 ITD 616, wherein after examining various case laws, the Tribunal has observed as under: "From the combined reading of the case law, the following legal position emerges: (1) If the income do....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... law as pronouncements made by the Hon'ble Supreme Court and binding decisions of the various High Courts?" 3. The facts necessary for deciding this appeal in short are that the Corporation was constituted for promoting cinematic activities in State of Uttar Pradesh. This Corporation was owned by the State Government to implement a scheme as per policy decision of the State of U.P. vide Government Order dated 24.03.1993. The State Government by the said Government Order envisaged selling-off certain properties, which was non-viable Cinema-Houses and constructed by the Corporation in suburban/ mofussil towns. The scheme under which these cinema houses sought to be sold were under deferred payment plan, for which the tenders were invited. The prospective purchasers purchased the property after executing an agreement on deferred payment plan which includes the payment of instalments of part consideration along with interest at the rate given under the agreement/sale deed. In the relevant accounting year, the income of interest was of three units, known as Sikandarabad, Bharwari and Dariyabad Unit. In all these three units, the first instalment of principal amount to the extent ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TR 760 (Allahabad) 10. Commissioner of Income Tax Vs. Giriraj Udyog (P) Ltd; (2005) 273 ITR 495 (Allahabad) 11. Commissioner of Income Tax Vs. Govind Agencies (P) Ltd.; 2007 (10) MTC 805 (Allahabad) 12. Commissioner of Income Tax Vs. Sikaria Sons and Co.; (1995) 216 ITR 440 (Gauhati) 13. H.M. Kashiparekh & Co. Ltd. Vs. Commissioner of Income Tax, Bombay North, Kutch and Saurashtra; (1960) 39 ITR 706 (Bombay) 14. Kedarnath Jute Mfg. Co. Ltd. Vs. Commissioner of Income Tax (Central), Calcutta; (1971) 82 ITR 363 (SC) 15. Commissioner of Income Tax, West Bengal I Vs. India Discount Co. Ltd.; (1970) 75 ITR 191 (SC) 16. B.S.C. Footwear Ltd. Vs. Ridgway (Inspector of Taxes); (1970) 77 ITR 857 (Court of Appeal) 17. Commissioner of Income Tax Vs. Eicher Ltd.; (2010) 320 ITR 410 (Delhi) 18. Poysha Oxygen (P) Ltd. Vs. Deputy Commissioner of Income Tax; (2004) 91 ITD 616 (Delhi) 19. FGP Ltd Vs. Commissioner of Income Tax; (2010) 326 ITR 444 (Bombay) 20. Commissioner of Income Tax Vs. Shiv Prakash Janak Raj and Co. Pvt. Ltd.; (1996) 222 ITR 583 (SC) 21. Commissioner of Income Tax Vs. Tamilnadu Mercantile Bank Ltd.; (2007) 291 ITR 137 (Madras) 22. Morvi Ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....argeable within the meaning of the Act. 9. On the contrary, learned counsel for the Revenue has relied upon the judgements of State Bank of Travancore Vs. Commissioner of Income Tax, Kerla; (1986) 2 SCC 11 and Commissioner of Income Tax Vs. Excel Industries Ltd.; (2013) 262 CTR (SC) 261, which has also been relied upon by learned counsel for the appellant. Sri Manish Mishra, learned counsel for the Revenue has also relied upon the following judgements in support of his arguments: "1. Commissioner of Income Tax Vs. Mahavir Plantations Pvt. Ltd.; (2014) 360 ITR 22 (Kerala). 2. Southern Technologies Limited Vs. Joint Commissioner of Income Tax, Coimbatore; (2010) 2 SCC 548. 3. Commissioner of Income Tax Vs. Shiv Prakash Janak Raj and Co. Pvt. Ltd.; (1996) 222 ITR 583 (SC). 4. Commissioner of Income Tax Vs. Balrampur Commercial Enterprises Ltd.; (2003) 262 ITR 439 (Calcutta). 5. T.R.F. Ltd. Vs. Commissioner of Income Tax; (2010) 323 ITR 397 (SC)." 10. Relying upon the aforesaid judgements, learned counsel for the Revenue/ department submits that if the amount become due to the assessee, the same shall fall within the definition of income as defined in section 2(24)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as such a State Government Undertaking which has been constituted by the State Government to promote the cinematic activities and exhibition of popular cinemas throughout the State. The State Government directed the Corporation to sell off the non workable,non functional cinemas. These properties were of three units, details of which has been given in the earlier part of the judgement. These three properties were sold through a scheme known as 'Deferred Payment Plan' it is not denied that under the deferred payment plan, the purchaser is under obligation to pay the interest on unpaid amount which requires to be paid in accordance with the schedule of payment fixed. It is also not denied from the side of the appellant that this amount of interest was payable by the purchasers to Corporation on the basis of fixed rate of interest as given under the agreement entered into between the purchasers and the Corporation. It is also not in dispute that in case of default, the interest on defaulted amount was also liable to be paid in the form of interest. Admittedly, no circular by Central Board of Direct Taxes (in short 'CBDT') had been issued under Section 119 of the Act t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India." 18. Section 9 of the Act provides that the income deemed to accrue or arise in India which squarely covers that all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India shall deemed to be accrued or arise in India subject to restriction mentioned in Section 9 of the Act. No clause of section 9 or section 28 of the Act has been brought to the notice of the Court which allows the assessee to absolve from taxability on such income on the ground of non realization of the same. The placing the interest income in 'Interest Suspense Account' by the assessee is not sufficient to absolve the assessee from taxability of such interest income in absence of any provision of the Act. Therefore, we are of the firm view that in absence of any notification or instructions issued by CBDT under....