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TMI Blog2023 (11) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... ,03,076/- 5. The learned CIT(A) ought to have appreciated that the accrual of interest was not automatic and in the given circumstances no interest had accrued to the appellant and consequently no interest income was rightly offered to tax by the appellant. Rs. 29,04,03,076/- 6. The learned CIT(A) ought to have accepted the explanation offered by the appellant and ought to have refrained from upholding the impugned addition. Rs. 29,04,03,076/- 7. The learned CIT(A) has wrongly inferred that the appellant was using two systems of accounting for the same year. The appellant has done all its accounting only in mercantile accounting system. Rs. 29,04,03,076/- 8. The learned CIT(A) has not appreciated that the appellant had constructed all the accounts in the correct manner. The learned CIT(A) is incorrect in assuming that the accounting system was incorrect. Rs. 29,04,03,076/- 9. The learned CIT(A) has failed to appreciate that all the income either already accrued or to be accrued in future has been correctly and fully subjected to Tax. Rs. 29,04,03,076/- 10. The entire order of the learned CIT(A) is relying on the judgment of the Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, it is respectfully submitted that the delay of 2 days in filing the appeal has occurred on account of the fact that I was out of station in connection with business commitments even though the appeal was prepared in advance to be filed before the Tribunal and the appeal papers were kept ready for my signature and only on my return from out station, the appeal was signed by me and immediately without further loss of time the appeal was filed before the Tribunal on 25.04.23, causing a delay of 2 days. Thus, the delay in filing the appeal is not intentional and it was on account of bona fide reason stated above." 2.3 In view of the above, the assessee could not file the appeal before this Tribunal well in time and by the time the appeal papers were prepared for filing, there arose delay of about 2 days in filing the present appeal before this Tribunal. The reason for the delay in filing the present appeal was due to reason beyond the control of the assessee. He thus prayed for the delay to be condoned. 2.4 The Ld.DR though objected however could not controvert the reasoning given by the Ld.AR for the delay that was caused in filing the present appeal. We have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." 2.9 Considering the submissions by both sides and respectfully following the observation by Hon'ble Supreme Court, we find it fit to condone the delay caused in filing the present appeal as it is not attributable to the assessee. Accordingly, the delay in filing the present appeal stands condoned. 3. Brief facts of the case are as under: 3.1 Assessee filed its return of income on 30.09.2015 declaring total income of Rs. 330,33,40,230/-. The case was selected for scrutiny and notices u/s. 143(2) of the act was issued in response to which representative of assessee filed necessary details as called for. The Ld.AO noted that there was a specified domestic transaction between assessee and its AE and accordingly a reference was made to the transfer pricing officer. The Ld.TPO passed u/s. 92CA of the act determining no additions to the arms length price. The Ld.AO thereafter while scrutinising the proceedings and the documents filed, observed that assessee has advanced loans to various individuals an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debt. 6. The case decided by honourable Supreme Court as mentioned above is completely applicable in the case of the appellant. In view of the above the ground number 1,2,3,4 and 5 are dismissed and the other grounds are consequential in nature hence not discussed here." 3.4 The Ld.CIT(A) dismissed the appeal of the assessee by relying on the decision of Hon'ble Supreme Court in case of Pr.CIT 6 vs. Khyati Realtors Pvt. Ltd. reported in (2022) 141 taxmann.com 461. 3.5 Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal. 4. At the outset, the Ld.AR submitted that all the grounds raised are in respect of one single issue. He also submitted that similar issue was considered by Coordinate Bench of this Tribunal for A.Ys. 2008-09 to 2014-15 in ITA Nos. 928 to 931/Bang/2017 and 174 to 176/Bang/2018 by order dated 27.11.2018. 5. He submitted that all the observations of the Ld.CIT(A) and Ld.AO has been dealt with based on the mercantile system of accounting followed by the assessee in respect of ICDs and regular business activities. He submitted that this Tribunal remanded the issue back to the Ld.AO by observing as under: "20. Now, we decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Rs. 31,93,21,126. Making charges income is recognized on dispatch of goods. Interest on bank deposits and other interest bearing loans are accounted on accrual basis. However during the year the management has changed the accounting policy with regard to accounting of interest income on interest bearing loans other than bank deposits to cash basis due to which the profit for the year has been has been understated by Rs. 14,82,02,244/- Dividend income on investments is accounted for when the right to receive the payment is established." 21. From the above, it is seen that as per the assessee itself, the management in the present year has changed the accounting policy with regard to accounting of interest income on interest bearing loans other than bank deposits and the changed system is cash basis and due to this, the profit for the year ending as on 31.03.2010 has been stated to be underreported by Rs. 14,82,02,244/-. Hence it is seen that the assessee itself has admitted in annual report that from accounting year 2009-10, in respect of interest on ICDs, the assessee is following cash system of accounting and because of that, the profit of the assessee was under repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Annual reports of two years i.e. Accounting year ended on 31.03.2011 & 31.03.2012, it has to be ascertained that the interest income has really accrued by applying real income theory as approved by Hon'ble apex court in the case of State Bank of Travancore vs. CIT as reported in 158 ITR 102. In this case, it was held that the concept of reality of the income and the actuality of the situation are relevant factors which go to the making up of the accrual of income but once accrual takes place and income accrues, the same cannot be defeated by any theory of real income. The concept of real income may have to be given precedence in computation of income in a particular case but accrued income cannot be waived as not having accrued to the assessee. In this case, the issue was decided against the assessee and in favour of the revenue because of the facts of that case. As per the facts of that case, it was seen that the assessee neither decided to treat interest income on sticky advances as bad debt nor claims deductions under s. 36(2) but still enters the same with a diminished hope of recovery in the suspense account. Hence, as per this judgment, it was held that real income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any year afterwards by writing of the same in its books." On the contrary, the Ld.DR submitted that no details were filed before the Ld.CIT(A) and therefore the claim of the assessee should not be considered. We have perused the submissions advanced by both sides in the light of records placed before us. 6. We note that the Ld.CIT(A) has disallowed the claim of assessee as bad debts by relying on the decision of Hon'ble Supreme Court in case of Pr.CIT 6 vs. Khyati Realtors Pvt. Ltd. (supra). On perusal of the said decision, it is found that Hon'ble Supreme Court rejected the claim contention of assessee by observing that the claim of the amount advanced by the assessee therein to a developer for acquiring an immovable property was in the nature of capital expenditure as the assessee had not brought any evidence or material to show that the advance was made in its ordinary course of business. In the present facts of the case, there is no dispute in respect of the accrual of the interest and that assessee had followed mercantile system of accounting for the ICDs. Further the Ld.AO has not questioned that the ICDs was not made in the regular course of the business. We therefore do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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