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2014 (12) TMI 146 - GUJARAT HIGH COURTInterest income on share application money - Whether the Tribunal was right in holding that interest income on the share application money deposited in the bank was the income accrued – Held that:- The Tribunal was rightly of the view that once it is held that the share application money received by the assessee was for all intents and purposes, except the prohibition put by the provision of section 69 of the Companies Act, the assessee's money, the natural corollary follows that the income earned on deposits of such money with the banks, if any, also belonged to the assessee and consequently was liable to be taxed in accordance with the system of accounting followed - though the assessee might have not withdrawn the deposits and interest but the banks had duly credited the interest upto 31.3.95 because it is mandatory for the banks to provide for interest payable or received on Mercantile System and therefore, the assessee cannot say that the interest upto 31.3.95 was not credited bank on such deposits - assessee has not furnished any evidence to the contrary except the claim the interest was offered for taxation in the AY 1996-97 – thus, the interest accrued on Fixed Deposits up to 31.3.95 was legally assessable in the hands of the assessee company in AY 1995-96 and AO was quite justified in assessing the same on accrual basis in AY 1995-96 – thus, the order of the Tribunal is upheld – decided against assessee.
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