TMI Blog2019 (11) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... f the previous year in which the assessee s accounts are closed. Once the interest is accrued, it has to be charged to tax in accordance 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 AO and sustained by the appellate authority is held as in order. The assessee s corresponding plea are dismissed. - ITA No.3099/Chny/2018 (Assessment Year: 2005-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax (Appeals) ( CIT (A) ) on the following grounds amongst others each without prejudice to the other or others. 2. The order of the CIT (A) is arbitrary, and contrary to law, considering the facts and circumstances of the case. 3. The Respondent factually committed an error and has stated in his order that the Authorised Representative stated that the interest was not recognised in the books since the same was not received during the year while the fact remains that the Appellant had recognised the revenue on accrual basis as per the terms of the agreement and as per Accounting Standards and recorded the interest income soon after it became due in the financial year 2007- 08. The Learned CIT (A) faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the interest and the principal amount was received in financial year 2007-08 and was offered to tax in the assessment year 2008-09. Therefore, he pleaded to allow the appeal. 4. Per contra, the ld.DR supported the order of the ld.CIT(A) and hence the relevant portion is extracted as under:- 4.3. I have considered submissions of the ld.AR and perused assessment order. The admitted fact is that an advance of ₹ 1,10,00,000/- had been given to M/s.Seahorse Hospitality Ltd. as a loan which carries interest rate of 10.5%. However, ld.AR says that appellant has not demanded interest during the financial year 2004-05 and 2005-06 and therefore, the same has not been recognized in its books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the circumstances, addition made by the AO is confirmed. The grounds taken by the appellant are dismissed. 4.2 Following my own decision in appellant s own case, AO is directed to follow and apply the above decision for this A.Y.2005-06. The grounds taken on this issue are dismissed. 5. We heard the rival submissions and gone through the relevant materials. The undisputed facts are that the assessee is a company and following mercantile assessment of accounting. The assessee primarily relied on the copy of the letter issued by M/s. Seahorse Hospitals Limited dated 01.12.2004, wherein M/s. Seahorse Hospitals Ltd., confirmed the receipt of ₹ 1,10,00,000/- from the assessee company and also confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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