2016 (4) TMI 942

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a non- resident and made several deposits in the scheduled bank. The ld. Counsel further submitted that the interest earned by the assessee on the deposits made Non-resident External account is exempt u/s 10(4)(i) of the Act. The assessee has subsequently converted the deposits into Non-resident Non-repatriable account in 2001. The interest was still exempt from taxation u/s 10(15) of the Act. According to the ld. Counsel, the Assessing Officer's contention that the entire interest receipt of Rs. 4,69,43,615/- was taxable for the assessment year 2005-06 has not been approved by the CIT(A) and the amount taxable during the assessment year 2006-07 has been determined at Rs. 33,69,100/-. The Assessing Officer further found that the residen....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sel further submitted that even if the claim made by the assessee that the interest income was exempted from taxation is not correct, still that cannot be a reason to levy penalty in view of the judgment of the Apex Court in CIT vs Reliance Petroproducts Pvt. Ltd, 322 ITR 158. 2. On the contrary, Shri Sasikumar, ld. Departmental Representative submitted that during the assessment proceedings, the Assessing Officer found that the assessee was following cash system of accounting, therefore, the interest income of Rs. 4,69,43,615/- is taxable during the assessment year 2005-06. The assessee claimed before the CIT(A) that he was following mercantile system of accounting, therefore, the interest income has to be taxed on accrual basis. The CIT(....