1993 (6) TMI 48

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..... o it ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in holding that the interest becomes taxable in the year in which the Excise Department gives credit to the assessee. ?" The respondent is a firm. It is an abkari contractor. We are concerned with the assessment year 1983-84, for which the accounting period ended on March 31, 1983. The firm had deposited a sum of Rs. 9,86,190 in March, 1980, with the Government as advance kist. The interest due on this amount for this year amounted to Rs. 39,448. Admittedly, the assessee is keeping its accounts on the mercantile basis. While computing the total income for the assessment year 1983-84, the Income-tax Officer included the said sum o .....

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..... 4, the successful bidder has to make deposit, at the time of signing of the agreement, of an amount equivalent to 30 per cent. of the bid. This amount can be in treasury deposits. Treasury deposits, however, will have to be assigned to the Excise Commissioner. The Excise Commissioner will adjust this deposit against the dues from the successful bidder towards the end of the period of auction. Now interest will accrue on these deposits. It is the Department's case that such interest is the income of the assessee and should be taxed in the year in which the income accrued. Now if the deposits were with the assessee there is no doubt that such interest would accrue to the assessee and should be taxed in the year in which such interest have acc .....

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..... kists or otherwise paid when the balance is struck. Till then, he will not be entitled to receive the amount in cash. It may be that only when the amount is finally struck, the amount due to the assessee may be exactly determined. But, none of these factors will prevent the accrual of interest. The said accrual is from time to time. Even though the assessee is not entitled to receive such interest during the relevant year, nor will it be paid in cash, the fact that such interest will accrue to his credit and will be reckoned finally cannot admit of any doubt. We are not told nor is there any material in the paper book adverted to by the Commissioner of Income-tax (Appeals) or the Appellate Tribunal, that, by any statutory provision or term .....

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