2010 (3) TMI 806

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..... nt. This is the bunch of five appeals, all filed by the assessees. The common assessment year for all the appeals is 2006-07. These appeals are directed against the individual orders passed by the CIT(A)-II at Bangalore dated 25-9-2009 and arise out of the respective assessment completed under section 143(3) of the Income-tax Act. 2. All these assessees have subscribed 8 per cent Reserve Bank of India Bonds, in the previous year relevant to the assessment year under appeal. The 8 per cent RBI Bonds were redeemable on maturity along with interest on 9-5-2011. The Reserve Bank of India credits interest on this Bond at the time of maturity and not before. 3. In the above scenario, the assessees filed the return of income but without .....

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..... t particular assessment year and to be offered for taxation. He held that the said Circular covers the present issue as well and, therefore, Revenue officials are bound by the circular issued by the Board. He accordingly upheld the orders of the assessing authority. 6. The assessees are aggrieved and, therefore, these appeals before us. 7. We heard both sides in details. 8. The reference made by the CIT(A) on the Board's Circular No. 2 of 2002, dated 15-2-2002 reported in 252 ITR (St.) 241, issued in the context of Deep Discount Bonds is not applicable to the present case of 8 per cent Reserve Bank of India Bonds. The general Rule on recognition of income is either accrual or cash method. The assessees has the right to choose the meth .....

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..... al basis from year to year as contemplated by the assessing authority, the assessees should get the benefit of the credit of the TDS attributable to that amount of interest income. If that credit is to be taken benefit, then the Reserve Bank of India should have deducted tax on yearly basis. Here, the Reserve Bank of India makes the deduction of tax only at the time of redemption. How it is possible for an assessees to claim credit for the TDS made by the Reserve Bank of India? This is almost impossible. This impossibility defeats the contention of the assessing authority that the interest income attributable to 8 per cent RBI Bonds should have been offered on accrual basis. 11. Regarding the Circular issued by the CBDT in the context of .....

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