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2017 (11) TMI 1548 - AT - Income TaxAccrual of income - Addition on account of accrued interest income - assessee company followed mercantile system of accounting - Held that:- the assessee is following the accrual system of accounting the income is accrued only on the point when it is finally to be received by the assessee with reasonable certainty and absence of certainty of receipt and recovery of the amount cannot be classified as income accrued for the purpose of charging to income tax. The Hon’ble Supreme Court in case of CIT Vs. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT) has observed that the probability or improbability of realization of the income by the assessee has to be considered from a realistic and practical point of view which is one test laid down by the Hon’ble Apex Court in determining the income when accrued. Only a right under the agreement to receive the interest by the assessee without reasonable certainty of realization of the same cannot be brought to income tax. Hence, in view of the facts and circumstances of the case when the realization of the amount is not certain then the same cannot be charged to income tax. - Decided against revenue
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