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TMI Blog1984 (4) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Bank of Middle East, Bombay, and State Bank of India, Kodaikanal. The amount in the British Bank of Middle East was Rs. 20,48,005 and the amount in the State Bank of India was Rs. 70,000. Under the terms of the deposit with the British Bank of Middle East, interest was payable on 30th June and 31st December of each year and with the State Bank of India every month. Since the assessee's valuation date was 31st March, the assessee had taken into account only the interest credited on 31st December in the British Bank of Middle East account, and on 1st March in the State Bank of India account. The WTO was of the view that even the interest accrued after dates of credit until 31st March in each year was to be added to the net wealth of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counting at all. What we are concerned with is the question whether there was at all in existence any asset which could be said to consist of the interest payable on the fixed deposits for the period 31st December to 31st March in the case of the British Bank of Middle East deposit. It is well known that interest can be said to have accrued only when it becomes due and payable under the terms of the loan or deposit. In the case of a promissory note payable on demand but in the case of a fixed deposit the terms of which state that interest is payable only at the expiry of six months, i.e., 30th June and 31st December interest accrues only when that date is reached. Even though the interest may be calculated for the period which has elapsed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transfer of Property Act, 1882, the mere right to sue cannot be transferred. It would follow that what cannot be transferred is not property and, therefore, cannot be an asset for the purposes of the Act. Under section 2(e) of the Act 'asset' includes certain items. This definition, however, does not mean that an item which is not property could be treated as an asset merely because it is not exempted from that section. 6. This interest which has not accrued and would represent only a mere right to sue cannot be transferred, it would not be property and, consequently, cannot be treated as an asset for the wealth-tax purposes. 7. Secondly, interest which has not accrued has not vested in the assessee and, hence, he has no right even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the stipulated rate earned on the principal amount can be said to have accrued annually and if so whether a depositor is entitled to claim the benefit of deductions under section 80L of the Income-tax Act, 1961, in respect of such interest which has accrued. 4. The Government has decided that interest for each year calculated at the stipulated rate will be taxed as income accrued in that year. The benefit of deductions under section 80L of the Income-tax Act, 1961, will be available on such interest."---Chaturvedi and Pithisaria's Income-Tax Law, Vol. 1, Third edn., p. 284. This shows that the revenue is aware of the fact that the interest does not arise before the date it is due and only as a matter of concession it is calculated and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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