TMI Blog2018 (10) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ut from the material collected during the course of survey, the assessee has charged interest from two persons, namely Sri G. Yathiraj Kumar and Smt. K.Seshavataram. This fact has not been disputed by the assessee. It is also a fact that the assessee is following mercantile system of accounting. The assessee simply submitted that due to heavy competition in the business, funds advanced to the customers and no interest is charged from them, but he has not filed any supportive evidence to substantiate his argument. It is also a fact that assessee is charging interest. It is also a fact that same submission is made even in the earlier years. CIT(A) correctly confirmed the order of the Assessing Officer - Decided against assessee - ITA Nos. 57 And 58/VIZ/2018 - - - Dated:- 5-10-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Assessee : Shri G.V.N. Hari, Advocate. For The Department : Shri D.V. Subba Rao, Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER These appeals by the same assessee are directed against the separate orders of Commissioner of Income Tax (Appeals), Tirupati, both dated 29/12/2017 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest payments are accounted on accrual basis and it is not the case of the assessee that cash system of accounting is being followed for all interest 'receipts and payments. Once accrual system of accounting is followed, the assessee cannot make a claim that interest i8 being admitted at the time of repayment of loan by the debtors on cash basis in some cases. Under section 145, income shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee and the assessee cannot follow mercantile system of accounting for certain transactions and cash system of accounting for other transactions. On similar facts and circumstances, it has been held by the Tribunal, Hyderabad, in its order dated 10-08-2003 in ITA No.699/Hyd/2002 in the case of Shakuntala Raihi, that in the absence of any evidence to prove that the recovery of debt was in doubt, interest automatically accrues and is assessable to tax. Decision of the Calcutta Bench of the Tribunal in the case of Javanthi Commerce Ltd. Vs. ACIT 61 lTD 183 (Cal), and the decision of Hon'ble Calcutta High Court in CIT Vs. Hindustan Motors Ltd. 202 ITR 839 (Cal) and that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant did not controvert the findings of the AO. In the course of survey action in the case of the appellant on 15.6.2004, incriminating material was found indicating charging of interest on advances on accrual basis. The AO while making assessment for AY 2005-06 found that assessee has charged interest on advances made to several persons on accrual basis. However, the appellant failed to give any convincing explanation or give any contrary evidence against the findings of the AO in the of assessment AY 2004-05 that interest was not charged on accrual basis. The appellant did not file any evidence in support of claim of any doubtful advances. The assessee is following mercantile system of accounting in respect of interest charged. Therefore, I am convinced with the findings of the AO, that interest to the tune of ₹ 2,51,030/- is accrued on the outstanding advance as on 31.3.2004 of ₹ 16,05,553/-. While doing so, reliance is placed on the decision of the Calcutta Bench of the Tribunal in the case of Jayanti Commerce Ltd. Vs. ACIT, 61 ITD 183, decision of the Hon'ble Calcutta High Court in CIT Vs. Hindustan Motors Ltd., 202 ITR 839 and decision of the Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have heard both the parties, perused the material available on record and gone through orders of the authorities below. 18. The assessee has advanced various amounts to the customers which is attached with Annexure-A of the assessment order. The case of the assessee is that he has not charged any interest, however, the Assessing Officer has pointed out from the material collected during the course of survey, the assessee has charged interest from two persons, namely Sri G. Yathiraj Kumar and Smt. K.Seshavataram. This fact has not been disputed by the assessee. It is also a fact that the assessee is following mercantile system of accounting. The assessee simply submitted that due to heavy competition in the business, funds advanced to the customers and no interest is charged from them, but he has not filed any supportive evidence to substantiate his argument. It is also a fact that assessee is charging interest. It is also a fact that same submission is made even in the earlier years. By considering all the facts and circumstances of the case, we are of the opinion that ld. CIT(A) correctly confirmed the order of the Assessing Officer. For the sake of convenience, the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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