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2022 (9) TMI 188 - Income Tax
Additions towards amount of TDS deducted on interest - accrual of interest income but not received - HELD THAT:- As in this case is that there is no finding that any amount in cash or cheques on account of interest from M/s. Anjani Technoplast Ltd., has been received by the assessee except the amount deposited as TDS by M/s. Anjani Technoplast Ltd.. Even the said TDS was not traceable as on the date of filing of the return of income by the assessee on 29/02/2012.
Whether because of the deposit of the aforesaid amount as TDS by M/s. Anjani Technoplast Ltd., can the assessee be taxed on the interest income when the case of the assessee is that it has not received any amount during the year under consideration either on account of principal or on account of interest income from M/s. Anjani Technoplast Ltd. and even the litigation for the recovery of loan was also going on during the year.
It will not be justified in this case to charge income tax from the assessee on the interest income when neither such amount has been paid by M/s. Anjani Technoplast Ltd. to the assessee nor there is any likelihood of the payment of the same to the assessee and even the litigation is going on between the parties.
Merely because, M/s. Anjani Technoplast Ltd. has deposited TDS amount that itself will not fasten liability on the assessee to pay tax on the total interest income especially under the circumstances, when the other party has failed to repay the loan amount and interest thereupon and the litigation was going on.
As held by the Higher Courts that only the real income should be taxed and not the hypothetical income as that will place the assessee in a disadvantageous position as on the one hand, the assessee is struggling to recover its principal amount without any hope of receiving interest income thereupon and then to fasten liability on the assessee on accrual basis of the interest income for which there did not seem any probability of recovery of the same.
Addition made by the lower authorities in this case of the amount is not justified. The only addition which can be made by the lower authorities is of the actual income received by the assessee by way of TDS in his account - The Assessing Officer is directed to deduct admissible tax upon the aforesaid income and refund the remaining amount out of the said amount to the assessee as per the provisions of the I.T. Act. With the above observations, the appeal of the assessee is treated as partly allowed.