TMI Blog2019 (3) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company for the asst. yr. 1998-99. We direct the AO to delete the said interest from the computation of taxable income. The interest from such non-performing assets. As will be taxed in the appropriate assessment years on the basis of actual receipt. The issue of interest from non-performing assets is therefore decided in favour of the assessee - T.C.A.Nos.76 & 77 of 2009 - - - Dated:- 5-3-2019 - Dr. Justice Vineet Kothari And Mr. Justice C.V. Karthikeyan For the Appellant : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan For the Respondent : Mr.T.Ravikumar, Senior Standing Counsel. JUDGMENT DR. VINEET KOTHARI, J. Both these Appeals have been filed by the Appellant/Assessee under Section 260A of the Income Tax Act, in short, 'Act', raising the following Substantial Questions of Law arising from the order of the learned Income Tax Appellate Tribunal, in short, 'Tribunal', dated 10.03.2006, for Assessment Year 1997-1998. 2. T.C.A.No.76 of 2009 was admitted by a Co-ordinate Bench of this Court on 03.03.2009 only on three questions quoted below, as the remaining above quoted six questions were already covered by a Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and they are decided against the assessee, the above appeal is admitted on the following substantial questions of law : 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the differential income on hire purchase transaction due to the change in the apportionment of income from Sum of Digits Method (SOD) to Internal Rate of Return (IRR) method effected by the appellant in the relevant previous year is not for bonafide reasons ? 2. Whether on the facts and in the circumstances of the case, the Tribunal erred in not appreciating that IRR is a more defined and accepted method of accounting than SOD and hence ought to have upheld the change in method of accounting ? 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cost of software given on lease is capital in nature and hence not allowable as deduction ? Notice to the Respondent. 3. T.C.A.No.77 of 2009 was admitted by a Co-ordinate Bench of this Court along with T.C.A.No.76 of 2009 on 03.03.2009 on the following only Substantial Question of Law : Whether on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the appellant preferred an appeal to the CIT(A). The CIT(A) by following the earlier order of his predecessor for the asst. yr. 1995-96 allowed the appeal. Aggrieved against the order of the CIT(A), the Revenue preferred an appeal before the Tribunal. The Tribunal following the decision of this Court in T.N.Power Finance Infrastructure Development Corporation Ltd. vs. Jt. CIT (2007) 213 CTR (Mad) 610 : (2006) 280 ITR 491 (Mad) decided the issue against the appellant. With regard to the collection of contingency deposits, the Tribunal followed its order for the earlier assessment years and reversed the order of the CIT(A). The correctness of the said order is now put in issue before this Court. 4. We heard the counsel for the appellant and perused the materials on record. 5. The first and second questions of law are interrelated to each other. Learned counsel appearing for the assessee submits that the issue involved in these questions of law is squarely covered by the decision of this Court in the case of T.N. Power Finance Infrastructure Development Corporation Ltd. (supra) against the assessee. In the said judgment, the Division Bench of this Court has hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S-9 issued by the ICAI. Therefore, the assessee is justified in not recognising the income as such. Once that is the case, there is no occasion to consider whether the principle of accrual would arise or not. In view of the matter, we are of the considered view that the lower authorities have erred in treating the interest on non-performing assets as income of the assessee company for the asst. yr. 1998-99. We direct the AO to delete the said interest from the computation of taxable income. The interest from such non-performing assets. As will be taxed in the appropriate assessment years on the basis of actual receipt. The issue of interest from non-performing assets is therefore decided in favour of the assessee and the relevant grounds are allowed.' From the above, it is clear that the Tribunal had given a factual finding that there is no accrual of income during the year. Thus, all the aforesaid questions of law are answered in terms of the judgments quoted above. 5. First and Second Questions of Law about Taxability of Apportionment of Income on Sum of Digits (SOD) Method or Internal Rate of Return (IRR) Method are covered by yet another decision rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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