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2010 (4) TMI 217 - HC - Income TaxMethod of accounting - Excess collection of cash – correct date of payment of PF dues – accrual of interest on government securities – claim of deduction u/s 36(1)(vii)(a) - advance income received by way of commission, exchange and discount, including locker rent – ITAT has decided all the issues in favor of assessee – Held that: - the liability on account of excess cash received at the cash counters of the bank represents the liability to pay the customers as and when they may demand payment, no addition be made on account of excess collection of cash - interest on Government securities can be said to accrue only when it becomes due and, therefore, there cannot be a charge to such income until such time that it becomes due – claim of bad debts is consistent with the provisions of Section 36(1)(viia) which refer to “an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank” - though in a given case the entire payment may be received in advance, the assessee accounted for the payment as it accrues over a period of time. The Assessing Officer made an addition of Rs.3.46 crores on the ground that the change in the method of accounting resulted in lower profits to that extent. – view of AO is incorrect – change in method of accounting is not detrimental to interest of revenue.
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