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TMI Blog2019 (4) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... come made by the AO on account of difference between interest income shown in Form 26AS and that was declared by the assessee, both in normal computation of income and to the book profits computed u/s. 115JB of the Income Tax Act (Act). 3. We have heard the parties and perused the record. 4. The assessee is engaged in the business of asset reconstruction and management for banks. It filed its return of income declaring total income of Rs. 10,95,93,260/-. During the course of assessment proceedings, the AO noticed that the assessee has claimed credit for TDS amount of Rs. 79,15,150/-. The said TDS amount was deducted from the aggregate amount of interest income of Rs. 7,95,71,500/- from fixed deposits kept with various banks. The AO notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest income of Rs. 7,95,71,500/- as income of the assessee. Accordingly, the difference amount of Rs. 51,57,949/- was added by the AO both for computing the total income as well as for computing book profits u/s. 115JB of the Act. The Ld. CIT(A) also confirmed the same. Hence the assessee has filed this appeal before us. 6. We notice that neither the assessee nor the AO has obtained the details from the banks, which credited interest to the fixed deposit account of the assessee, which could have thrown light on the reasons for the difference. At the time of hearing, Ld. AR submitted that the assessee is following Mercantile System of Accounting and hence it is accounting for interest on fixed deposits on time basis. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made by the AO is in accordance with rule 37BA of the Income Tax Rules and r.w.s. 199 of the Act. 8. We have heard the rival contentions and perused the record. Admittedly neither the assessee nor the AO had called for details of interest credited by the banks from the respective banks nor did they ascertain the methodology adopted by the bank for accounting for accrued interest. Since both the banks and assessee are following mercantile system of accounting, the interest accrued on the Fixed Deposits should tally, i.e., should be of same figure, only if uniform method of calculating accrued interest is followed by the assessee and the banks. As submitted by Ld. AR, if there is difference in methodology, there bound to be differenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the assessee may be accepted in order to settle the matter. We are holding so for the reason that the difference, if any, would get neutralized upon maturity of fixed deposit and further the assessee is consistently following same method over the years, whose computations are verified by the statutory auditors. Accordingly, we are of the view that the AO may be directed to examine the computation made by the assessee for accounting of accrued interest and if he is satisfied that the same methodology is followed over the years, then the AO may restrict the addition to Rs. 1,18,734/- being the net amount of difference of interest income over FYs. 2009-10 to 2013-14 and this, in our view, will put this issue at rest. Accordingly, we se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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