1990 (3) TMI 40

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....ivable as interest for the previous year. However, when return was filed on November 21, 1977, its chartered accountants stated in the forwarding letter of the same date that they were instructed not to include the said or some other amount in the income of the petitioner as the debt itself had become bad. There was no hope of recovery of the principal amount, not to speak of any interest that might accrue thereon. The claim thus was that interest receivable on the credit balance did not and could not be said to have accrued as real income. The Income-tax Officer rejected the claim. The Commissioner of Income-tax (Appeals) set aside the assessment with a direction to make a fresh assessment according to law after making proper investigation....

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....o the Supreme Court judgment in the case of State Bank of Travancore v. CIT, reported in [1986] 158 ITR 102. Being of the view that the principles laid down in the said judgment were applicable, he held that income by way of interest from Kamani Estate had accrued to the assessee during the previous year relevant to the assessment year 1976-77. Ms. Patel, learned counsel for the petitioner, has supported the petition. Taking the court through the petition and various orders attached to the petition, she reiterated that the petitioner had bona fide changed its method of accounting and, therefore, income by way of interest could not have been taxed in the hands of the petitioner on accrual basis. As regards the Supreme Court decision in St....

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....4 which he did. The only other aspect that requires consideration is whether the impugned order suffers from an apparent error of law. As regards the ground of change of method of accounting, it is evident from the order that the ground has been very correctly and properly rejected by the Commissioner. Records clearly show that no claim as regards change of accounting method was made before the Income-tax Officer during the assessment proceedings ; no ground about it was taken in the appeal memo and the Commissioner (Appeals) had no occasion to consider that ground The question of interference on this ground cannot, therefore, arise. Regarding the question whether income by way of interest on this debt had or can be said to have accru....