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2015 (2) TMI 291 - HC - Income TaxInterest income from housing loans given by the assessee to the seven societies - whether be treated as income accrued or received to the assessee? - assessee was following mercantile system of accounting - Held that:- Chargeable interest is interest that accrued or arose in the previous year, irrespective of whether such interest was actually received. Thus, where any loan or advance is given for a certain term, for example, where a loan is given for 5 years and interest is to be computed periodically, but is actually realised in advance, at the time of disbursement of the loan/advance, there interest would become chargeable. Periodically and not at the time when it is actually realised. Similarly, if the interest is to be computed in monthly, quarterly, or yearly rests, chargeable interest would accrue at the end of the months, quarter or year, as the case may be, even though actual realization may take place at a later date. As already held that nonoperational sticky loans in respect of which mercantile actual of interest was shown in the suspense account and not the profit and loss account, would not, in law, be payable on mercantile accrual basis. Interest on such loans would have to be accounted for and paid as and when it is realised. See UCO BANK VS. CIT, WEST BENGAL-III, KOLKATA [2014 (1) TMI 86 - CALCUTTA HIGH COURT] - Decided in favour of the assessee. Provisions of section 34 of the Code of Civil Procedure relied particularly in view of section 5 of the Income Tax Act, 1961 - Held that:- In this case, it was not any doubtful loan and the interest has not been kept, although, the Tribunal has held, as noted herein above. . The assessee in this case was and had never decided to waive off any loan or interest, but, has filed suits and bad debts can be written-off in terms of Section 37 of the Act.- Decided in favour of the assessee.
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