2023 (1) TMI 725 - HC - Income Tax
Accrual of income - Income from interest on securities - Whether computed on accrual basis or on due basis? - HELD THAT:- As held that interest can be said to have accrued only on the date on which it was due as per the terms and conditions of the security. When an instrument or an agreement stipulates interest to be payable at specified date, interest does not accrue to the holder thereof on any date prior thereto. Interest would accrue or arise only on the date specified in the instrument.
Learned counsel for the appellant fairly submits that though in the body of the judgment there is no discussion on the issue as to the finding of the Bombay High Court that the interest income on securities has to be taxed on due basis, nonetheless, by the aforesaid decision, the appeals preferred by the revenue were dismissed.
As in Commissioner of Income Tax v. State Bank of India [2016 (8) TMI 963 - BOMBAY HIGH COURT] one of the substantial questions of law which was considered by the Bombay High Court was whether Tribunal was right in law in accepting the plea of the assessee that the interest income on the securities had to be taxed on due basis only instead of accrual basis as per the mercantile system of accounting followed by the assessee.
Insofar this question is concerned, Bombay High Court referred to its previous decision in Credit Suisse First Boston (Cyprus) Limited [2012 (8) TMI 17 - BOMBAY HIGH COURT] and held that issue stands concluded against the revenue and in favour of the assessee.
We concur with the view expressed by the Bombay High Court in M/s. Credit Suisse First Boston (Cyprus) Ltd [2012 (8) TMI 17 - BOMBAY HIGH COURT] followed by the decision in State Bank of India (2 supra). Decided in favour of the assessee.