2015 (2) TMI 291
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....ad as under; 4. The assessee filed its original return of income for different assessment years. Pursuant thereto, case of the assessee for different years came to be examined by the concerned AOs during the relevant assessment years. Thereafter, certain additions came to be made to the income of the assessee for the relevant assessment years towards interest income due to the assessee. Hence, the assessee approached the CIT(A) by filing separate appeal for each assessment year, which, came to be dismissed. Being aggrieved thereby, the assessee carried the matter before the Tribunal, which allowed the appeals filed by the assessee. Hence, the appellant-Revenue preferred the present appeals. 5. It appears that the AO examined the case of the assessee for relevant assessment years and held that they were liable to tax for the interest income, which would accrue in future, as they were following the mercantile system. 6. The main bone of the contention raised by Mr. Mehta, learned Advocate for the appellantrevenue, was that the assessee did not charge interest, by picking and choosing, on some of the Cooperative Societies, namely Mallinathorabhy (Odhav) Co. Op. Housing Society, Pad....
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.... 384; (4) CIT Vs. Orissa State Financial Corporation(Orissa), 201 ITR 595; (5) CIT Vs. M.P. Finance Corporation(Madhya Pradesh High Court), 227 ITR 888; (6) CIT Vs. Citibank N.A.(Bombay High Court), 208 ITR 930; (7) CIT Vs. Rajasthan Financial Corporation(Rajasthan High Court), 89.taxman 376". 8. The tribunal in Paras-8 and 9 of its order, Dated : 27.08.2001, has observed and held as under; "8. We have considered the rival submission of representatives of both the parties, perused the records and gone through the decision referred. The assessee followed mercantile method of accounting which means all income accrued during the year should be accounted for in the books of account irrespective of the fact that the income is received in this year or it received in future. The "accrual of income" is root of the issue of the appeal. "Accrue" meas the right to receive profit and that there must be a debt owned to the assessee by some body. Unless and until there is created in favour of the assessee a debit due by somebody, it cannot be said that he has acquired a right to received the income or that income has accrued to him. To deal with such a situation, the Institute of Chartered Ac....
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....RAL AND IND. DEVELOPMENT CORPORATION VS. CIT", [2008] 302 ITR 120 (HP) and has contended that the Tribunal has misread the word 'accrual' and it ought to have upheld the reasoning given by the CIT(A). 11. As against this, Mr. Soparkar, learned Sr. Advocate, placed reliance on the following judgments; (1) "CIT VS. U.P. FINANCIAL CORPORATION", [1992] 194 ITR 282; (2) "CIT VS. ORISSA STATE FINANCIAL CORPORATION", [1993] 201 ITR 595 (3) "MAHARASHTRA STATE FINANCIAL CORPORATION LTD. VS. CIT", [2005] 278 ITR 654 (Bom); (4) "UCO BANK VS. CIT, WEST BENGAL-III, KOLKATA", [2014] 43 taxmann.com 294; 12. Having heard the learned Counsels for the parties and having given our anxious thought, the decision in "STATE BANK OF TRAVANCORE" (Supra) cannot be made applicable to the facts of the case and in favour of the Revenue. More particularly, while considering the earlier decisions, regarding the principle of real income, the Apex Court in "STATE BANK OF TRAVANCORE" (Supra) has laid down the following presumptions; "As a result of the aforesaid discussion, the following propositions emerge: (1) It is the income which has really accrued or arisen to the assessee that is taxable. Whether the ....
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....110 ITR 336 and the decision of the Apex Court in "UCO BANK VS. CIT", [1999] 237 ITR 889 and while considering the same, at Paras-4, 13, 14 and 18, it observed and held as under; "4. In case of assessment of tax under the Income Tax Act, no tax was levied on sticky loans on accrual basis. This was clarified by a circular of the Board dated 6th October, 1952, which was rescinded in view of the judgment of the Kerala High Court in the case of State Bank of Travancore v. CIT [1986] 158 ITR 102/24 Taxman 337(SC). XXX XXX XXX 13. Chargeable interest has been defined in Section 2(5) of the Interest Act 1974, to mean the total amount of interest referred to in Section 5, computed in the manner laid down in Section 6. Thus, chargeable interest of any previous year of a credit institution is the total amount of interest (other than interest on loans and advances made to other credit institution s, co-operative societies etc., accruing or arising to the credit institution in that previous year. 14. Chargeable interest is interest that accrued or arose in the previous year, irrespective of whether such interest was actually received. Thus, where any loan or advance is given for a certain ....