9911796707
TMI Blog2017 (12) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 6,70,00,000/-, on various dates, in Ordyn Technologies Private Limited @15% p.a.. The interest for the impugned assessment year comes to Rs. 45,30,822/-. The assessee has also advanced loan amounting to Rs. 4 crore to Shri Sateesh Kumar @ 15% interest and the interest thereon was Rs. 60 lacs. In both the cases due to commercial consideration and financial position of the borrower, the assessee did not recognize any interest in its books of account. The assessment u/s. 143(3) was completed but the Assessing Officer did not make any addition in the income of the assessee. The CIT-7 vide his order, dated 09.01.2013, passed u/s. 263 of the Income tax Act, remanded the matter back to the Assessing Officer for the limited issue of non-reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than fifty percent of its net worth. The company has incurred cash losses during the year and the immediately preceding financial year. (xi) The company has defaulted in repayment of dues to optionally convertible debenture twitters. Debentures amounting to Rs. 200,000,000 which became due for redemption on 21 November 2008 has not yet been redeemed by OK company and the interest (including default interest for non-redemption of debentures and non-payment of interest) due an such debentures amounting to Rs. 64,823,474/- has also not been paid. Further, the due date for redemption of debentures amounting to Rs. 32,000,000/- which fell due between 31st March 2008 and 31st March 2009, has been extended to 31st March 2010 by the debenture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were very high. The company was not even able to repay its debenture. The assessee has also submitted before the authorities below that it has not received any interest or refund of the said amount till the date of making submissions. The interest income, in fact, has not accrued to the assessee. We noted that income tax is leviable on the real income and if no income has accrued to the assessee income tax cannot be levied. The question therefore arises whether any income has accrued during the year. It is not denied that the assessee being private limited company was following mercantile system of account as provided u/s. 145(1) of the Income tax Act. Section 145(2) empowers the Central Government to notify Accounting Standard in the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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