2008 (1) TMI 195

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....ted in the profit and loss account, it is income under the mercantile system of accounting followed by the assessee, the assessee's case is that interest on securities is payable only on maturity of Government security and all what the assessee has done, is only to show the interest attributable for the relevant previous year, though it was not received by the assessee. The assessee's case is that so long as interest is not received or due, it cannot be assessed as income, no matter it is credited in the profit and loss account or not. The amount involved, viz., Rs. 5,67,18,983, is admittedly the interest not received by the assessee during the previous year, and the deposit did not mature during the previous year to entitle the assessee fo....

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....money applied is stock-in-trade, interest on securities is assessable under the head "Profits and gains of business or profession". There is no dispute on this and the assessee has paid tax on the interest received from the Government securities. However, the question is whether interest shown in the profit and loss account on securities matured in later years, could be assessed during the relevant assessment year. Section 145 of the Act states that income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub-section (3) of s....