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TMI Blog2011 (10) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... encashment. Encashment can be made only on the due date. When the principal amount involved in the instrument itself is redeemable only on due date, there is no reason to hold that the interest element would be generated on accrual basis. The interest also goes along with the principal amount in the case of securities. The fall out of the above position is that in the case of a Government security, the interest could be recognized only on due date and not on accrual basis. This fundamental character of a Government instrument itself is sufficient to justify the method of interest income recognition by the assessee-bank. We find that the order of the Commissioner of Income-tax (Appeals) is just and proper in law. The appeal filed by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Hyderabad in the case of Andhra Bank vs. DCIT in their order dated 11.4.2008 passed in ITA Nos.380 381/Hyd/2006. In these circumstances, we find that the view taken by the Commissioner of Income-tax (Appeals) is justified in law. The Revenue fails. 5. The second issue raised by the Revenue is that the Commissioner of Income-tax (Appeals) has erred in holding that the interest on securities has to be taxed on due basis. The Revenue has taxed it on accrual basis. The Commissioner of Income-tax (Appeals) held that the issue is covered by the decision of the Hon ble Madras High Court in the cases of Tamilnadu Mercantile Bank Limited (291 ITR 137) and City Union Bank Limited (291 ITR 144). The Commissioner of Income-tax (Appeals) fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Appeals) is just and proper in law. The appeal filed by the Revenue fails. 7. The only ground in the appeal filed by the assessee-bank is that the Commissioner of Income-tax (Appeals) has erred in upholding the jurisdiction of the Assessing Officer to reopen the assessment under sec.147 of Income-tax Act, 1961. In first appeal, the Commissioner of Income-tax (Appeals) has upheld the income escaping assessment but decided the issue in favour of the assessee on merit. The decision of the Commissioner of Income-tax (Appeals) taken on merit, has been challenged by the Revenue in appeal before us. The order of the Commissioner of Income-tax (Appeals) on those issues taken on merit, has been confirmed by us while dealing with the is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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