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TMI Blog2017 (12) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... t was advanced to the party. Therefore we hold that the income of interest indeed has accrued to the assessee but has not been realized. Thus, applying the rule of real theory income we hold that the addition for the amount of interest income cannot be sustained in the hands of assessee. Thus, ground raised by assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... adding a sum of ₹ 1900000/- on account of interest on loan to ISG Traders Ltd. b) For that on the facts and circumstances of the case and in law, ld. CIT(A) erred in upholding the order of ld. A/O ignoring the fact that interest upto 31.03.2003 was accepted to be due on 31.03.2003 by the ISG Traders Limited itself which became over due by more than six months as on 31.03.2004 because of non receipt of the same upto 31.03.2004 and therefore RBI's NBFC Prudential Norms Directions became mandatory for the appellant in the year under this appeal. b) For the on the facts and circumstances of the case and in law, ld. CIT(A) erred in following the Hon'ble ITATs judgment in appellant's case for asst. yr. 2006-07 without appreciatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT submitted that it has received any amount from M/s ISG Traders Ltd., Therefore, no addition can be sustained on account of interest income. However, Ld. CIT(A) disregarded the contention of assessee by observing as under:- "4.1. I have examined the assessment order as well as the submissions of the A.R. of the appellant. I am not in agreement with the views of the A.R. of the appellant. In appellant's own case for A.Y. 2006-07 on the same issue the Hon'ble ITAT, B Bench Kolkata has adjudicated on 27th May, 2014 at ITA No. 1385/Kol/2011 in favour of the Revenue. The relevant portion of the judgment is elaborated as below :- "10. It is an admitted position th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve accounts, deducting tax at source and also remitting such tax to the Government account. No doubt Hon'ble Delhi High Court in the case of Vasisth Chay Vypar Limited (supra) had held that, once Inter- Corporate Deposits had become non-performing asset and possibility of realising interest was almost nil, no interest could be treated as accrued to the assessee. However, the loans given here by the assessee, were not Inter- Corporate deposits. There is nothing on record to show that possibility of realizing the interest was nil. Ld. Counsel of the assessee had admitted that the ·said companies were having substantial assets with them. Hence we cannot say that interest income was illusory or not real. In such circumstances, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal as assessee failed to produce the evidence to demonstrate that the interest became overdue. Therefore, the addition was sustained. However, in the instant case, the interest became due during the year as evident from the TDS certificate issued by M/s ISG Traders Ltd. to the assessee. Therefore no cognizance of the order of this Co-ordinate Bench of this Tribunal can be taken in the instant case of assessee. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 8. We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. In the instant case, the addition was made by AO on account of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-company being NBFC was bound by the aforesaid provisions. Therefore, under the aforesaid provisions, it was mandatory on regard to the recognized accounting principles. The accounting principles, which the assessee was indubitably bound to follow, were AS-9. [Para 16] Therefore, it could not be said that income in the form of interest, though not received, had still accrued to the assessee under the provisions of the Income-tax Act and was, therefore, exigible to tax. It was so for the reasons: (1)The assessee had not received any interest on the said ICDs placed with 'S' since the assessment year 1996-97 as it had become NPA in accordance with the Prudential Norms, which was entered in the books of account as well. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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