TMI Blog2014 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... est was not paid, he would not have been under an obligation to show the amount of interest in his returns, much less to pay tax - once TDS is affected, he cannot be permitted to use the certificate to cover other amounts even while refusing to show the amount of interest in his returns. Since the appellant has adopted the cash system and he did not receive the interest regarding which the TDS was affected, the TDS amount deserves to be treated as income. However, the attempt made by him to treat that amount as tax for the corresponding amount, cannot be permitted – Decided partly in favour of Assessee. - I.T.T.A Nos. 52 And 54 of 2002 - - - Dated:- 6-8-2014 - L. Narasimha Reddy And Challa Kodanda Ram,JJ. For the Appellant : Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in that behalf. There is no dispute about the interest paid by the 2nd company, since the appellant has shown the same as income and paid tax thereon. The assessing officer took objection to this and passed an order of assessment treating the interest payable by the 1st company on transfer basis, as income and levied tax. The same result ensued for various financial years. Aggrieved by that, the appellant filed appeals before the Commissioner of Income Tax, Visakhapatnam. The appeals were dismissed. Thereupon, the appellant filed further appeals before the Tribunal. Through order dated 09-11-2001, the Tribunal dismissed the appeals. Learned counsel for the appellant submits that it is open for an assessee to adopt partly the cash sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by him. In contrast, under the mercantile system, mere entitlement to receive would bring about the obligation to pay tax. The assessees choose one of them or both of them for different parts, after taking note of the advantages and disadvantages in adopting these methods. We are concerned with the income of the appellant in the form of interest, on the loans which he has advanced to the two companies referred to above. As a matter of fact, he is the Managing Director of the 1st company. His case is that the 2nd company was paying interest regularly and in relation to the transaction of that company, he adopted mercantile system. There is no dispute about payment of tax on that. For the transaction with the 1st company, he has chosen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l did not approve the method adopted by the appellant. The appellant cannot be permitted to blow hot and cold at one and the same time. If no TDS was affected and interest was not paid, he would not have been under an obligation to show the amount of interest in his returns, much less to pay tax thereon. However, once TDS is affected, he cannot be permitted to use the certificate to cover other amounts even while refusing to show the amount of interest in his returns. The steps taken by the authorities in this behalf cannot be treated as applying the parameters for mercantile system to a component of the returns filed under the cash system. The effect of the order passed by the assessing officer as upheld by the Commissioner and the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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