TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1551
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....ready reference : "Though the Tax Case Appeal is filed by formulating as many as nine questions of law including the following questions of law as questions No.1 to 5 : 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that since the appellant is following Mercantile System of Accounting, the interest income on Non-Performing Assets (sticky loans) should be assessed to tax on accrual basis ? 2. Whether on the facts and in the circumstances of the case, the Tribunal ought to have appreciated that the income was not accounted on account of uncertainty of realisation and hence applying the ratio of the decision of the Supreme Court in the case of Godhra Electric Supply Co. vs. C.I.T. (225 ITR 746) held that income does not accrue even under Mercantile System of Accounting ? 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in not following the decision of the jurisdictional High Court in the Appellant's own case for the Assessment Years 1993-94 and 1994-95? 4. Whether on the facts and in the circumstances of the case, the Tribunal ought to have appreciated that RBI guidelines a....
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....ramed above, on which these Appeals were admitted, are now covered by a decision of this Court in the case of Assessee itself in Sundaram Finance Limited v. Assistant Commissioner of Income Tax, (2009) 318 ITR 452, which was upheld by the Supreme Court in (2012) 349 ITR 356; Commissioner of Income Tax v. Elgi Finance Ltd., (2007) 293 ITR 357; and Integrated Finance Co. Ltd. v. Joint Commissioner of Income Tax, (2015) 373 ITR 517. The relevant extracts from the aforesaid judgments are quoted below for ready reference : (i) Sundaram Finance Limited v. Assistant Commissioner of Income Tax, (2009) 318 ITR 452 : The assessee filed an appeal against the order of the Tribunal, Madras, 'A' Bench made in ITA No.54/Mad/2002 dt.31st July,2006. The relevant asst. yr. is 1998-99. The substantial questions of law formulated for entertainment of the appeal are as follows : '1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the appellant is not entitled to deduction of the 'provision' made in respect of non-performing assets which are considered irrecoverable ? 2. Whether the Tribunal was justified in not apprec....
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....question of law is also covered by the decision of this Court in the case of CIT vs. Sakthi Finance Ltd. (2007) 210 CTR (Mad) 300; (2007) 291 ITR 83 (Mad), wherein it was held that as long as the receipt of the amount by the assessee was clearly associated with liability to refund the amount, such receipt of the amount would not be characterised as an income and, therefore, the same cannot be taxed vide K.C.P. Ltd. vs. CIT (2000) 162 CTR (SC) 320 : (2000) 245 ITR 421 (SC) and CIT vs. Southern Explosives Co. (2000) 242 ITR 107 (Mad). Thus, the third question of law is also covered by the decisions (sic) against the assessee. Thus, as all the questions of law raised are already answered against the assessee, the questions of law so formulated need not be reconsidered by us again as the issue is already settled. 6. For the above reasons, the tax case appeal is dismissed." (ii) Commissioner of Income Tax v. Elgi Finance Ltd., (2007) 293 ITR 357 : "5. Heard the counsel. There is no dispute that the above issue has already been considered by this Court by the unreported judgment cited supra. Further, the Tribunal also considered the issue whether the income has in fact accrued at a....
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....ear opinion that the later decision of Andhra Pradesh High Court relied on by the learned counsel for the Revenue does not help the case of the Revenue and Andhra Pradesh High Court itself distinguished the facts before it from the Madras High Court decision admittedly, the Assessee has been following the same method of E.M.I for bifurcation of its income into Principal and interest component for all these years in question. The S.O.D method gives higher finance charges (interest) for the initial years and lower finance charges (interest) for the later years, i.e, the Sum of Digits is sum total of the number of years e.g. If the Hire Purchase Agreement is for 10 years, the SOD is 55 (1+2+3+4+5+6+7+8+9+10 = 55). Therefore, total financial charges for the first year would be 10/55, for the second year 9/55, for third year 8/55 and so forth which would clearly give higher financial charges for interest taxable in the first year. This SOD method even though adopted by the Assessee in its Book of Accounts on the basis of Guidelines issued by the Institute of Chartered Accountants of India was not adopted in the Returns of Income filed by it which consistently adopted EMI method for ta....