Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1076 - ITAT DELHIAccrual of income - Addition being notional interest income - Revenue recognition method - system of accounting - computed @17.95% on loan advanced to group concern - HELD THAT:- Where the principle amount of loan/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. Our view is fortified from the decision in the case of CIT v. Motor Credit Co. P. Ltd. [1980 (4) TMI 64 - MADRAS HIGH COURT]. Hon'ble High Court of Delhi in the case of CIT v. Goyal M.G. Gases (P) Ltd. [2007 (7) TMI 241 - DELHI HIGH COURT] has held that when the realization of even the principal amount of loan was in jeopardy, there could not be any real accrual of income by way of interest, even as per the mercantile system of accounting. Thus on given set of facts there is no accrual of interest even though the assessee's following the mercantile system of accounting and the charge of notional interest by the AO/CIT(A) is bad on facts and deserves to be deleted. We direct accordingly. Appeal of the assessee is allowed.
|