Mercantile system allows interest income recognition based on actual receipts for govt entity.

The tribunal upheld the decision to allow a government entity to recognize interest income based on actual receipts, following the mercantile system and AS-9, due to uncertainty from ongoing NCLAT proceedings involving borrowers undergoing one-time settlements. The Commissioner of Income Tax (Appeals) had deleted the addition of interest income, accepting the entity's audited accounts approved by the Comptroller and Auditor General. The Income Tax Appellate Tribunal (ITAT) relied on the MMTC Ltd. case to support this approach, noting that the Assessing Officer failed to prove the entity received the disputed interest during the year. .....

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