2006 (10) TMI 134

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....as delivered by P. D. Dinakaran J.- The above tax case appeal is directed against the order of the Income-tax Appellate Tribunal dated June 30, 2005, made in I. T. A. No. 494/Mds/2000 for the assessment year 1993-94, setting aside the orders of the authorities below. 2. The facts in a nutshell are that the assessee, a company wholly owned by the State Government, filed its return of income f....

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...., the assessee submitted that the interest on deposit with M/s. Andhra Bank Financial Services Ltd., has not accrued to the assessee company since the principal was in doubt and for that reason alone, the assessee-company has been accounting for the interest on receipt basis. But, the Commissioner of Income-tax (Appeals), taking note of the order of the Commissioner of Income-tax (Appeals) - III d....

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....eld that the assessee is entitled to follow the cash system of accounting with regard to interest, thereby setting aside the orders of the authorities below and upholding the claim of the assessee. Hence, the present appeal by the Department raising the following substantial questions of law : "(i) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that inter....

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.... Services Ltd. has not accrued to the assessee-company since the principal was in doubt, and that M/s. Andhra Bank Financial Services Ltd. defaulted in the payment of interest during the financial year 1992-93 and therefore, from that year onwards the assessee-company has been accounting for the interest on receipt basis. 8. When an issue regarding hybrid accounting came up before the apex cour....