9911796707
TMI Blog2008 (1) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... AMACHANDRAN NAIR JJ. JUDGMENT The judgment of the court was delivered by C. N. RAMACHANDRAN NAIR J.—1. The question raised in this appeal filed by the Revenue is as to whether income shown by the assessee in the profit and loss account in the form of interest on Government securities, is assessable for the assessment year 1989-90. While the case of the Department is that when the interest on Government securities is credited in the profit and loss account, it is income under the mercantile system of accounting followed by the assessee, the assessee's case is that interest on securities is payable only on maturity of Government security and all what the assessee has done, is only to show the interest attributable for the relevant previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the previous year, the assessee was not entitled to interest and so much so, interest did not accrue during the previous year. 3. After the amendment of 1988, interest on securities is assessable as income from other sources under section 56(2)(id) of the Act unless it is chargeable to income-tax under the head "Profits and gains of business or profession". In this case, since the assessee is a banking company and money applied is stock-in-trade, interest on securities is assessable under the head "Profits and gains of business or profession". There is no dispute on this and the assessee has paid tax on the interest received from the Government securities. However, the question is whether interest shown in the profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in the profit and loss account as income, it is assessable under the Act. Income accrued obviously means income that has become due or receivable by the assessee. In this case, the Department has no case that the securities held by the assessee were matured during the relevant year or the assessee was entitled to receive the interest on such securities. Since the securities had not matured for payment, the assessee was obviously not entitled to interest, and the interest was really not due to them in the previous year. The assessee had shown it in the profit and loss account only to show what it is entitled in due course which statement may help better explanation of the financial position of the assessee. Merely because the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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