TaxTMI 
TaxTMI 
2023 (3) TMI 1578
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....nsideration. The AO noticed from Form No.26AS that M/s Essar Steel India Ltd has deducted TDS of Rs. 32,85,608/- on the interest payable to the assessee. Further, it was noticed that the assessee and M/s Essar Steel India Ltd belonged to the same group. Accordingly, the AO took the view that the interest income receivable by the assessee is assessable in the hands of the assessee. He computed the interest income at Rs. 3,28,56,079/- on the basis of TDS amount and accordingly assessed the same in the hands of the assessee. However, he did not allow TDS credit of Rs. 32,85,608/- against the tax due from the assessee. The Ld CIT(A) also confirmed the same and hence the assessee has filed this appeal. 3. The Ld A.R placed reliance on the submissions made before the AO in order to explain the stand of the assessee. The assessee has made following submissions before the AO:- "3. In response to the same, the assessee company has submitted its reply on 25.02.2021 and the same is reproduced hereunder- "The assessee company had unsecured Inter-corporate deposits placed with M/s Essar Steel India Limited (ESTIL). Due to non-serving of loan availed from the various lenders....
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....ribunal in the case of M/s Nutan Warehousing Co Pvt Ltd Vs. ACIT (ITA No.471/PUN/2018 dated 11-05-2021). He further submitted that the assessee can be said to have received interest only to the extent of TDS amount deducted by the Interim Resolution Professional. Accordingly, he submitted that the interest income, to the extent of TDS amount of Rs. 32,85,608/-, may be taxed in the hands of the assessee and the said TDS amount may be given credit to the assessee. 5. The Ld D.R, on the contrary, submitted that M/s Essar Steel India Limited belongs to assessee group only. Hence it cannot be said that there was no certainty of receipt of interest income. Accordingly, she contended that the Ld CIT(A) has rightly confirmed assessment of interest income. She further submitted that she has read reports that unsecured creditors are also being compensated. Accordingly, in the alternative, the Ld D.R submitted that a direction be given to the assessee to offer interest income, if any, received in future in that year, if the impugned issue is decided by the Tribunal in favour of the assessee. 6. We heard rival contentions and perused the record. The question that needs to be adjudicated ....
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....erved from 26AS data that the assessee had not shown interest from bank amounting to Rs. 26,125/ -. An addition was made on this account, which came to be sustained in the first appeal. 4. We have heard the ld. DR through virtual court and gone through the relevant material on record. There is no appearance from the side of assessee despite notice. It is seen that the 26AS data revealed the assessee earning interest income of Rs. 26,125/-from Rupee Co-op Bank Ltd., that was not disclosed. The bank had become defunct and no financial transactions were allowed. The RBI, vide its direction dated 21-02- 2013, referred to on page 16 of the impugned order, banned the transactions of the bank. Due to such a ban, even the principal amount deposited by the assessee became doubtful of recovery, much less the interest in question that was not received. Not only that, the assessee stated before the ld. CIT(A) during the course of the first appellate proceedings taking place in the year 2017 that the interest was not received even till that time. 5. The ld. CIT(A) has gone with the accrual concept of income under the mercantile system of accounting and held that the interest o....
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.... following the mercantile system of accounting, interest had accrued to the assessee as its income. 8. The contention of the assessee was that in the subsequent year, the assessee had written off the loans given to the seven parties as bad debts and the Assessing Officer had also accepted the writing off of the principal amount. Learned counsel for the revenue submitted that both the [CIT(A)] as well as the Tribunal were in error in taking note of subsequent events and should have strictly gone by the principles of the mercantile system of accounting and on that basis it should have been held that the Assessing Officer was correct in taking the interest on those advances as income having accrued to the assessee. 9. The Tribunal relied upon the decision of the Supreme Court in Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746. We have gone through this decision. The Supreme Court quoted a passage from an earlier decision rendered in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 where it had been stated as follows:- "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is at....