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TMI Blog2011 (3) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... as is to be considered in the case of investment in shares by assessees when the book value of the share as on the close of the financial year has to be inflated when the same is held as stock-in-trade. The valuation of the investment, therefore, cannot be subjected to tax under the mercantile system of accounting which has to follow the rigour of various statutes and law. Taxing income which has not been received and which has not been acknowledged as payable to an assessee cannot be taxed. Thus the interest income so brought to tax and confirmed by the CIT(A) is bound to be deleted. In favour of assessee. - 296 (CTK.) OF 2010 - - - Dated:- 21-3-2011 - K.K. GUPTA, K.S.S. PRASAD RAO, JJ. B.K. Dash for the Appellant. S.C. Mohanty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the bank do not deduct tax at source on a term deposit interest which period is more than a year which may have accrued to the assessee for the financial year but not credited would be subjected to TDS only when the term of the fixed deposit matures. He negated the claim of the assessee before him that deduction of tax at source has got no bearing to the accounting of interest accrued for the accounting year under mercantile system of accounting and upheld the order of the Assessing Officer on this issue. 3. The learned Counsel for the assessee submitted that the fixed deposits are held by the assessee with various banks for period more than five years and the bank on maturity of the fixed deposits credits the assessee's bank account wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not due to the assessee cannot be brought to tax because the assessee follows the mercantile system of accounting and in view of the fact that the CBDT had clearly instructed about the hardship faced by the assessees to coordinate with the TDS for a year with the income generated thereon to be taxed in the year itself. The banks also do not have any system of reporting interest accrued but not due to the assessee in view of the core banking software maintained by them. He submitted that the policy of the assessee is to render income of interest on the fixed deposits as and when the payee certifies the same having been remitted in the assessee's bank account. 4. The learned DR opposed the contentions of the assessee that the law provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would become taxable as and when the fixed deposits matures would be subjected to tax at source whether could be related to back period when the income rendered to tax in the impugned assessment year. The learned Counsel for the assessee has submitted that it is the policy of the assessee which policy is consistent with the CBDT Circular that the income would be rendered to tax as and when received by the assessee which would have suffered tax at source and be duly rendered under the mercantile system of accounting in compliance to section 14A therefore need not be disturbed for the purpose of finding the true income in the impugned assessment year only. The interest income is subjected to tax at source by the bank who would commit a defa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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