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2017 (12) TMI 115 - AT - Income TaxAddition of interest - accrual of interest - Inter-corporate deposits - Held that:- It is not denied that the Inter-corporate deposits made by the assessee were not recoverable from the company then what to talk of interest. When the recovery of the money advanced itself is doubtful, the question of accrual of interest, in our opinion, would not arise. Interest would have accrued to the assessee if it got enforceable right and interest would have been received by it. On the same analogy the interest in respect of the non-performing assets in the case of the bankers are not taken to be their income. Even otherwise also since the Revenue has not made any addition in the A.Y. 2010-11 and 2011-12 on the basis of these facts in respect of interest and on the principle of consistency, we are of the view that it cannot be said that interest has accrued to the assessee during the year when the Inter-corporate deposits is equivalent to non-performing assets in the case of the assessee. Non-recognition of interest on loan advanced to Shri Sateesh Kumar - Held that:- The borrower has taken loan by way of pledge 1,26,540 shares of Enzen Global Solutions Private Limited owned by him having face value of ₹ 12,65,400/- along with a demand promissory note and two post dated cheques of ₹ 4,05,00,000/-. The assessee has recognized interest amount of ₹ 10,19,178/- during the F.Y 2007-08 for sixty two days but the said interest was also not recovered. The borrower did not own up the commitment. The borrowers company was performing badly. Under these circumstances also and since the recovery of the original amount itself is doubtful, the interest income in our view can also not be added as income of the assessee. When the principal amount itself is a non-performing asset, interest cannot be said to have accrued to the assessee. We, therefore, in the light of the aforesaid discussions, set aside the order of the CIT(A) and delete the addition - Decided in favour of assessee.
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