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2013 (7) TMI 222 - ITAT MUMBAINotional interest on debentures - additions as the said interests have been accrued to the assessee - assessee stated to be following mercantile system of accounting - Held that:- As regards the findings of the AO and CIT(A) that various resolutions have been back dated and the same cannot be relied is based on presumptions and assumptions as the perusal of the records and the subsequent events leading to the amalgamation establishes that the debenture issuing company has been under serious financial crisis and the impugned resolutions passed to the effect of waiver of interest are reliable. Regarding the requirement of the resolution to be registered u/s 106 r.w.s. 192 of the Companies Act as observed by the CIT(A), it is pertinent to mention that the said provisions are not applicable as the resolutions passed by the debenture issuing company do not fall under the resolutions prescribed by the provisions of section 192(4) of the Companies Act. Also in similar set of facts, the ITAT in the case of Riya Holdings Ltd [2012 (11) TMI 756 - ITAT Mumbai] has directed the AO delete a similar amount of interest brought to tax concluding that merely because assessee was following mercantile system of accounting, it could not be held that income had accrued to it. As one of the fundamental principles of accounting that, as a measure of prudence and following the principle of conservatism, the incomes are not taken into account till the point of time that there is a reasonable degree of certainty of its realization, while all anticipated losses are taken into account as soon as there is a possibility, howsoever uncertain, of such losses being incurred. In favour of assessee.
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