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2016 (9) TMI 58 - GUJARAT HIGH COURT

2016 (9) TMI 58 - GUJARAT HIGH COURT - TMI - Disallowance of EMI Residual - tribunal deleted addition - Held that:- The assessee had sold during the year a portfolio of individual home loans aggregating ₹ 8109.09 lakhs by way of stock-in-trade on the date of transfer, which represented the principal value only of the loan portfolios of various persons for which the assessee was entitled to earn income by way of services with reference to the differential rate of interest as per the specifi .....

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ess of the agreed amount was recovered by it. Such amount would, therefore, be taxable in the year in which the same had accrued to the assessee. It is an admitted position that the EMI residual income had subsequently been brought to tax in the year in which the related recoveries were made. In these circumstances, the view taken by the Tribunal does not suffer from any legal infirmity, warranting interference. The appeals, therefore, fail and are accordingly summarily dismissed. - Decided agai .....

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002-03 and ITA No.1920/Ahd/2006 for assessment year 2003-04. Since the facts and contentions as well as the parties are common, the appeals were taken up for hearing together and are decided by this common judgment. 2. By these appeals under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ), the appellant - revenue has challenged the above referred order dated 22nd July, 2015 passed by the Tribunal by proposing the following question, stated to be a substantial quest .....

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pondent assessee is engaged in advancing various loans to its customers on which various amounts of EMIs comprising of principal amount and interest amount are recovered from the clients and the interest amount is shown as income. 3.1 In relation to the years under consideration, the Assessing Officer noticed that the assessee had sold its portfolio of individual home loans aggregating to ₹ 8109.09 lakhs but the assessee was obliged to act as receiving and paying agent for effecting recove .....

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rtfolio. This represented what is termed as EMI residual. Out of the above amount, the assessee set aside a sum of ₹ 428.13 lakhs on account of contingency of pre-payments and the balance amount of ₹ 507.29 lakhs was transferred to the profit and loss account. In the computation of income, the assessee reduced this amount from the net profit and then offered only ₹ 132.02 lakhs as income of the relevant year. This computation was on the basis of income actually earned so far as .....

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803.40 lakhs (i.e. EMI residual of ₹ 935.42 lakhs minus the amount already offered to tax amounting to ₹ 132.02 lakhs) in the assessment year. The assessee carried the matter in appeal before the Commissioner (Appeals) who deleted the addition on the ground that the income is to be brought to tax only when it accrues and the accrual takes place only in the year in which the amounts recovered from the borrowers are in excess of the amount payable to the buyers of loan portfolio. It w .....

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