TaxTMI 
TaxTMI 
2026 (7) TMI 1213
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.... 16.12.2018 for the Assessment Year 2016-17. 2. Department has raised the following grounds of appeal: 1) On the facts and circumstances of the case and also in law the Ld. Commissioner of Income-tax (Appeals) has erred in deleting the addition made by the Assessing Officer on account of the interest income of Rs. 2,14,64,956/- earned on the advances made by the assessee to its close associate company, wherefrom the lender has deducted TDS and income has accrued in the hands of the assessee 2) On the facts and circumstances of the case and also in law the Ld. Commissioner of Income-tax (Appeals) has erred in holding that the change in accounting method consistently followed by the assessee from mercantile system to cash....
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....s further reduced to Rs. 78,68,562/- after setting-off current year business losses. After availing deductions under Chapter VIA of the Act, assessee thus, reported total income of Rs. 78,58,560/- in the return. 3.1. During the course of assessment proceedings, ld. AO found that the total gross receipts as per 26AS was Rs. 2,97,65,282 and TDS in respect of the same was Rs. 29,69,985/-, whereas assessee had claimed TDS of Rs. 8,23,488/- and had offered the corresponding income of Rs. 83,00,326/- for taxation in the return filed by her. In this regard, assessee submitted that she had not received any amount from Aplab Limited and Bhavana Lighting Private Limited, whereas the amount due to them was as per the 26AS i.e. Rs. 2,09,34,819/- fro....
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....acts and since assessee had consistently followed the mercantile system and offered her interest income on accrual basis in earlier years, her contention regarding cash method of accounting was rejected. Accordingly, ld. AO added the amount of Rs. 2,14,64,956/- (2,09,34,819 + 5,30,137), treating it as accrued to the assessee for the year under consideration, to her total income under the head 'income from other sources'. 4. In the first appeal, factual matrix and the reasoning given at the assessment stage were reiterated. Assessee further submitted before the ld. CIT(A), the details about the financial status of the company Aplab Limited to which assessee had given a loan from where the interest income was accrued, to bring it to tax in....
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.... of APLAB Limited amounting to Rs. 16308471. TDS is paid up to FY 2015-16. for year 16-17 TDS paid is Rs. 164853/- & payable is Rs. 1840863/-. For year 2017-18 TDS not paid is Rs. 19964201/-." 4.1. Assessee placed reliance on several judicial precedents, details of which are captured in the first appellate order, comprising of - 1. CIT vs. Punjab State Industrial Development Corporation Ltd [2003] 132 Taxman 637 (P& H) 2. Sandeep Investment (P) Ltd. vs. ITO [1989] 29 ITD 565 (Kol) 3. Echke Limited vs. CIT [2008] 173 Taxman 79 (Guj) 4. CIT vs. Elgi Equipment Ltd. [2003] 128 Taxman 785 (Mad) 5. Rajasthan Investment Co. Pvt Ltd vs. CIT [1978] 113 ITR 294 (Cal) 6. CIT vs. Pondicherry Indu....
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....e. Courts have approved changes for "valid circumstances," such as financial distress, that cause hypothetical income to be unrealizable. The change should not be made to manipulate income or reduce tax liability. b) Consistency in the future: Assessee must consistently apply the new method in subsequent years after the change. Frequent switching between methods is not allowed and can trigger an assessment. c) Compliance with Income Computation and Disclosure Standards (ICDS): The change must align with the ICDS notified by the Central Government under Section 145(2) of the Act. The ICDS provides rules for specific areas like valuation of inventories and revenue recognition. d) Proper disclosure: Any change in acc....