TMI Blog2016 (8) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... ed investments - real income theory - appellant assessee treated these securities as non performing assets and sought depreciation in their value by making provision in its accounts in terms of Reserve Bank of India guidelines - AO held that securities were due for redemption and the amount payable is already determined also confirmed by CIT-A and ITAT - HELD THAT:- Tribunal has approved the observations of the CIT(A) that the real income theory cannot be so extended so as to negate accrual of an amount which is receivable by the appellant assessee. In support, reliance is placed upon the decision of this Court in Navin R Kamani Vs. Commissioner of Income Tax [ 1990 (3) TMI 40 - BOMBAY HIGH COURT] . The concept of real income theory can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 97. 2. The appellant assessee urges following questions of law for our consideration : (a) Whether the Tribunal erred in holding that interest paid by the appellant of ₹ 425,42,37,785 under Sections 234B, 220(2) and 215 of the Act cannot be allowed as deduction in computing its total income ? (b) In the alternative and without prejudice to the above, whether the Tribunal ought to have held that interest of ₹ 425,42,37,785 paid by the appellant under Sections 234B, 220(2) and 215 of the Act should be set off against the interest received by it on income tax refund and only the interest paid in excess of the interest received could be disallowed? (c) Whether the Tribunal erred in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts to the Assessing Officer. Consequent to the above, the Assessing Officer by order dated 27th March, 2015 passed under Section 143(3) r/w Section 254 of the Act allowed the appellant assessee's claim on account of bad debts under Section 36(1)(vii) of the Act. (ii) In the above view, as the appellant had succeeded on an alternative claim, the question of deduction under Section 36(1)(viia) of the Act is not pressed. Thus, question (d) is not entertained. 6. Regarding Question (e) : (i) The respondent assessee had claimed an amount of ₹ 2.23 crores on account of depreciation on securities which were due for redemption in the relevant previous year. This was on the ground that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the subject assessment year. Therefore, the diminution in the value of the asset ought to be allowed to determine the real income for the subject assessment year. (v) We find that the impugned order of the Tribunal has approved the observations of the CIT(A) that the real income theory cannot be so extended so as to negate accrual of an amount which is receivable by the appellant assessee. In support, reliance is placed upon the decision of this Court in Navin R Kamani Vs. Commissioner of Income Tax, 185 ITR 408. It also held that the concept of real income theory cannot be read so as to defeat the provisions of the Act. Further, the fall in value of security is not an ascertained liability and such adhoc deduction cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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