9911796707
TMI Blog2019 (11) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee advanced Rs. 1,10,00,000/- to M/s.Seahorse Hospitals Limited on 01.12.2004 at the interest rate of 10.5%. However the assessee has not recognized any interest against this advance. The Assessing Officer found that the assessee is following accrual method of accounting. Therefore, following the decisions of the Hon'ble Supreme Court in the case of Indermani Jatia v. CIT, 35 ITR 298 (SC) and CIT v. Shiv Prakash Janak Raj and Co.P. Ltd., 222 ITR 583 (SC), treated the interest receivable at Rs. 3,85,000/- at the rate of 10.5% as income and concluded the assessment. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interest income has been offered to tax in the financial year 2007-08 and has paid taxes on the same. Without prejudice to the fact that income is accrued in the financial year 2007-08, the CIT(A) ought to have given a direction/finding that if the interest income is brought to tax in financial year 2004-05, the same is to be eliminated from financial year 2007-08 and tax be computed accordingly and issue refund consequently in the financial year 2007-08. Therefore this warrants interference of this Hon'ble Tribunal. 6. The Appellant craves leave to file additional ground at the time of hearing. 3. The ld.AR presented the case and argued on the lines of grounds of appeal and took us through the relevant portion of the paper-book. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my considered opinion, is baseless and without any substance. He himself admitted that interest income has to be recognized on accrual basis as per accounting standard 9 and appellant has been following mercantile system of accounting. This fact shows that appellant has to recognized interest income on accrual basis. Further, mutually agreeing not to demand interest for a certain period cannot be the basis for not recognizing the income as per the accounting standard 9. In my considered opinion, AO has rightly relied upon case laws cited at supra and brought the interest income to tax on accrual basis in appellant's case. On the other hand, the submissions made by the ld.AR are contradictory and devoid of merits. In the circumstances, add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the method of accounting, i.e., mercantile system, employed by the assessee. The treatment between the parties or the subsequent settlement between the assessee and the other party is not affecting the chargeability of tax. Therefore, the interest accrued at the rate of 10.5% on the impugned loan for the period 01.12.2004 to 31.03.2005 is assessable during the period relevant to this assessment year and accordingly the amount levied by the Assessing Officer and sustained by the appellate authority is held as in order. The assessee's corresponding plea are dismissed.
5. In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 5th November, 2019 in Chennai. X X X X Extracts X X X X X X X X Extracts X X X X
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