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2016 (12) TMI 866 - AT - Income TaxAccrual of interest - real income receipt - Held that:- Since the assessee has not received or realized any interest, it has not accrued to the assesee. The assessee has not offered the said interest for taxation in the return of income filed with the Revenue. Only real income can be brought to tax and not hypothetical income is a well settled proposition of tax-laws. In our considered view, there was a mistake committed by partnership while finalizing its return of income filed with Revenue which was corrected by the said assessee on the very next day i.e. On 1st April, 2006 and no expenditure was claimed. Hence, in our considered view this interest income cannot be brought to tax in the hands of the assessee as it is not a real income but a hypothetical income. No prejudice is caused to the Revenue as the said partnership firm did not claimed any expenditure in its return of income towards interest expenditure payable on capital contributed by partners but the same was added to the closing WIP.In any case it is reversed on 01-04-2006 by the firm by reducing WIP. We further find that the A.O. has not made any enquiry with the said firm to bring on record any incriminating material to disprove the contentions and the submissions of the assessee. The addition of interest expenditure of ₹ 33,23,178/- to the income of the assessee is in our considered view is not sustainable in the eyes of law and is hereby ordered to be deleted. - Decided in favour of assessee
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