TMI Blog2013 (7) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... on to be registered u/s 106 r.w.s. 192 of the Companies Act as observed by the CIT(A), it is pertinent to mention that the said provisions are not applicable as the resolutions passed by the debenture issuing company do not fall under the resolutions prescribed by the provisions of section 192(4) of the Companies Act. Also in similar set of facts, the ITAT in the case of Riya Holdings Ltd [2012 (11) TMI 756 - ITAT Mumbai] has directed the AO delete a similar amount of interest brought to tax concluding that merely because assessee was following mercantile system of accounting, it could not be held that income had accrued to it. As one of the fundamental principles of accounting that, as a measure of prudence and following the principle o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment framed u/s 143(3), the AO had made additions of Rs.84,00,000/- each in both the assessment years being 2% of Rs.84,00,000/- as the resolutions passed by the company to the effect of waiver of interest forecasting the finance crisis for 6 years (from 2004 to 2010) was highly impossible. On appeal, the Ld.CIT(A) confirmed the action of the AO as there had been interest accrued to the assessee. Aggrieved by the impugned orders, the assessee is in appeal before us. 4. Before us, the Ld. AR of the assessee has stated that the assessee company follows mercantile system of accounting. As per Accounting Standard 9-Revenue Recognition issued by the Instituted of Chartered Accountants of India, para-13 'Revenue arising from the use by othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and the Ld. CIT(A) in support of the Revenues Case. 5. We have heard both the parties and perused the material on record. As regards the findings of the AO and the Ld.CIT(A) that various resolutions have been back dated and the same cannot be relied, in our view is based on presumptions and assumptions of the lower authorities as the perusal of the records and the subsequent events leading to the amalgamation establishes that the debenture issuing company has been under serious financial crisis and the impugned resolutions passed to the effect of waiver of interest are reliable. Regarding the requirement of the resolution to be registered u/s 106 r.w.s. 192 of the Companies Act as observed by the Ld.CIT(A), it is pertinent to mention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made. D) Non-recognition of income on the ground that the income had not really accrued as the realisability of the principal outstanding itself was doubtful, is legally correct under the mercantile system of accounting, when the same is in accordance with AS- I notified by the Government E) It is one of the fundamental principles of accounting that, as a measure of prudence and following the principle of conservatism, the incomes are not taken into account till the point of time that there is a reasonable degree of certainty of its realization, while all anticipated losses are taken into account as soon as there is a possibility, howsoever uncertain, of such losses being incurred. F) The provisions of section 145(1) are subject to, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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