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2015 (4) TMI 142 - AT - Income TaxAccrual of interest - receivable or not actually received - CIT(A) deleted the addition - Held that:- It is an admitted position that the loans were advanced based on Promissory Note. Interest can be considered as overdue only when there is an agreement between the parties wherein a stipulation is there with regard to the date of payment of interest. In the absence of any such stipulation, we can never say that interest has fallen due on a particular date or was overdue. There is nothing on record to show that possibility of realising the interest was nil. Ld. Counsel of the assessee had admitted that the said companies were having substantial assets with them. Hence we cannot say that interest income was illusory or not real. In such circumstances, we are of the considered opinion that the assessee cannot take of refuge under the Prudential Norms issued by the Reserve Bank of India and say that principles of accrual of income, when mercantile basis of accountancy is followed would not apply to it. No doubt, Section 45Q of the R.B.I. Act is overriding in nature and has to be given primacy. However unless and until an assessee shows that a loan or advance had become a non-performing asset, there can be no question of applying the norms set out for such non-performing asset. We are, therefore, of the opinion that ld. CIT(Appeals) fell in error in deleting the addition made by the Assessing Officer. We, therefore, set aside the order of ld. CIT(Appeal) and the addition made by the Assessing Officer is restored. - Decided against assessee.
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