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TMI Blog1989 (9) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ng period of account is the year ending on 16th Oct.,1972. 3. The facts stated by the Tribunal in the statement of case are as under : The assessee follows mercantile system of accounting. During the year under consideration, the assessee showed ₹ 11,013 as income in the P L A/c and ₹ 32,250 was credited directly to the capital account. The ITO in the course of the examination of the books of accounts found that the assessee, in fact, received an interest of ₹ 43,263 on maturity of fixed deposit during the previous year relevant to the assessment year under appeal. As to the reason for discrepancy, the assessee stated before the ITO that the amount of ₹ 32,250 which was not shown in the P L A/c represented inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that the interest income accrued to the assessee on the date the bank agreed to pay the same and confirmed the action of the ITO. 6. On further appeal, the Tribunal held as follows: Admittedly the assessee did not renew the fixed deposits which were to be renewed after 20th Nov., 1968 and 21st Feb.,1969 respectively in respect of the fixed deposits of ₹ 1 lac and ₹ 1,50,000. Since the assessee had not fulfilled the contract on his part, the bank was under no obligation or had no liability to pay interest on the fixed deposits after 20th Nov., 1968 and 21st Feb., 1969. Therefore, the interest income on the fixed deposits cannot be said to be accrued to the assessee after 20th Nov., 1968 and 21st Feb.,1969. The mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had entered into an agreement with the bank to renew the fixed deposits with the bank, the bank agreed to pay the interest on the fixed deposits during the intervening period when the fixed deposits were not renewed. The right of getting the interest arose to the assessee as a result of the agreement between the assessee and the bank in 1972. Even though the bank agreed to pay interest w.e.f. 20th Nov., 1968 and 21st Feb., 1969 on the two fixed deposits, it cannot be said that the assessee had any right to get any interest during that period, when there was no agreement between the bank and the assessee for renewal of the fixed deposits. 8. Under the circumstances we are of the view that the Tribunal has taken a correct view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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