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2011 (5) TMI 321 - HC - Income TaxAddition - interest accrued to the assessee as per the mercantile system of accounting - It was also asked to file copies of loan agreements and to explain and show cause as to why the accrued interest on such loan should not be taken as its income for the year under concern as it was maintaining its accounts on the mercantile/accrual basis - since the recoverability of the principal amount of loan itself was doubtful, a decision was taken as a prudent businessman and interest income was not accounted for in the books of account - In the case of CIT v. Vasisth Chay Vyapar Ltd. (2010 -TMI - 202354 - Delhi High Court)and this theory of 'real income' was discussed in detail. That was also a case of NBFC where loan/advance given by the said assessee had become NPA and keeping in view the guidelines of the RBI interest was not treated as accrued - Decided in favour of the assessee
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