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TMI Blog2011 (7) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the accounts was made with the defaulting borrowers, it was difficult to bifurcate the interim payments which had been made by the defaulting borrowers between the principal and the interest amount - Decided in favor of the assessee - 209 of 2011 - - - Dated:- 21-7-2011 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. JUDGMENT Ajay Kumar Mittal J.- 1. This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act"), has been filed by the Revenue against the order dated October 15, 2010, passed by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (in short "the Tribunal") in I. T. A. No. 179/Chandi/2010, relating to the assessment year 2006-07. 2. The following substantial questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d December 22, 2008, inter alia, made addition of an amount of Rs. 2,06,23,367 treating the deposits credited under the head "Current liabilities" in the balance-sheet, as income. The Assessing Officer observed that the assessee was maintaining its accounts on cash basis, and in the absence of any bifurcation of the principal amount and the interest, the entire amount was to be treated as having been received on account of interest. 4. The Commissioner of Income-tax (Appeals) (for short "the CIT (A)"), accepted the plea of the assessee and observed, vide order dated November 30, 2009, that the system of accounting for bifurcation of the amount received from the defaulting borrowers into principal and interest was being regularly followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, recorded as under : "15. On the other hand, learned counsel for the respondent-asses-see vehemently argued that the assessee being a financial institution has a large number of borrowers who default in repayments of loans and interest thereon. In order to recover such loans, policies are formulated by the Government from time to time in terms of which certain concessions/reliefs are allowed to the borrowers who deposit the outstanding amounts in instalments and thereafter the amount is bifurcated between interest and principal at the time of final settlement as per the scheme. In this regard, the accounting policy regularly followed by the assessee was that the bifurcation of interest and principal was done only at the time of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown at Rs. 2,06,23,367 during the year. In the absence of any details given, the entire amount is taken as having been received towards interest and is brought to tax. An addition of Rs. 2,06,23,367 is, there-fore, made to the income of the assessee. Evidently, the Assessing Officer has made generalised observations without pointing out any reasons to interfere with the regular accounting system followed by the assessee. There is no material to establish as to in what manner the system of accounting followed by the assessee with respect to the impugned amounts, does not lead to proper deduction of income. The Commissioner of Income-tax (Appeals), in our view, is correct in observing that till the final settlement of accounts with the defa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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