TMI Blog2023 (1) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... only the actual interest received on that account, was liable to be shown in P L account. As rightly done by the assessee company. The assessee being in the business of lending, if had borrowed any amount on interest that is not of much consequence in the present facts and circumstances as being watchful of it s business interest and to secure the principal amount at least, the assessee gave up the claim of interest income. There is no allegation of untoward benefit to the borrower as the two entities were not known to each other. There is also force in the contention of assessee that in any case, if shortfall in interest is adjusted from principal amount on principle of first appropriation towards interest before applying it to principal. Then being in lending business, the shortage towards principal would be allowable as bad debt. Which assessee prevented. Being in lending business the bad debt ratio is crucial to the assessee and thus business expediency cannot be more justified then here. - Decided in favour of the assessee. - ITA No. 1424/Del/2019 - - - Dated:- 25-1-2023 - SH. SHAMIM YAHYA , ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA , JUDICIAL MEMBER For the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Deed dated 14.07.2015. Thus the assessee claims to have only received interest to the extent of TDS deposited by M/s Parsvnath Developers Ltd., which have been duly accounted for in the books of account and shown as interest received from M/s Parsvnath Developers Ltd. Copy of account of M/s Parsvnath Developers Ltd. in the books of assessee company as well as Inter Corporate Deposit agreement and Settlement deed were duly submitted during the course of assessment proceedings. Since M/s Parsavnath Developers Ltd. has accounted for interest expense and paid TDS it was appearing in Form 26AS gross interest of Rs.85,70,960/- has been shown as interest paid / credited by M/s Parsvnath Developers Ltd., whereas settlement deed was entered into on 14.07.2015 i.e. prior to finalization of balance sheet of the assessee company and as per settlement deed no interest was receivable by the assessee company. Therefore the assessee company has not credited the interest of Rs.85,70,960/- in its profit loss account but credited only TDS deducted amounting to Rs.8,57,096/- being real income received / receivable by the company on inter corporate deposit given to M/s Parsvnath Developers Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is distinguishable on facts as in this case, Parsvnath Developers Limited duly recognised the interest expense in its financial statements and duly deducted the TDS on the same and paid to the revenue authorities. If the contention of the appellant is considered, then in such case there is double jeopardy to the revenue as on one hand Parsvnath Developer is treating such interest as expense and on the other hand the appellant company is not showing it as income. Furthermore, the right to receive interest was only waived off in the subsequent year. It is a trite law that each year is an independent year and hence, if the right to receive interest was waived off in the next year, the same would have an impact in the subsequent year and in this year the interest should be treated as income. Also, the appellant, on the one hand claims that interest never accrued and on the other hand it claims the benefit of TDS deducted on such interest in entirety which is against the provisions of the Act. 5. Assessee has come in appeal raising following grounds; 1. That on the law, facts and in the circumstances of the case, the Learned Commissioner of Income-tax (A) has erred in u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase laws :- Re: No Accrual of income if there is uncertainty in collection thereof 1. CIT v. Excel Industries Ltd. 358 ITR 295 (SC) 2. CIT v. Balbir Singh Maini:398 ITR 531(SC) 3. CIT v. Motor Credit Co. (P) Ltd. 127 ITR 572 (Mad.) [SLP filed by the revenue has been dismissed vide SLP (Civil) No. 2806 of 1981 (149 ITR (St. 93)] 4. CIT v. Ferozepur Finance (P) Ltd. 124 ITR 619 (P H) [SLP filed by the revenue has been dismissed vide SLP (Civil) No. 8158 of 1981 [144 ITR (St.) 50]. Re: Interest on ICDs which had had become NPA could not be said to have been accrued to the assessee 5. CIT v. Vasisth Chay Vyapar Ltd. 330 ITR 440 (Del) Affirmed by the Hon ble Supreme Court in 410 ITR 244 (SC) 6. CIT v. Brahmaputra Capital Financial Services Ltd.: ITA 107/2012 (Del. HC) Re : Commercial or business expediency of incurring any expenditure is to be seen from the assessee s point of view and the Revenue cannot justifiably put itself in the arm-chair of the businessman 9. SA Builders v. CIT : 288 ITR 1 (SC) 10. Hero Cycles Limited v. CIT (SC) : 379 ITR 347 (SC) 11. J.K. Woollen Manufacturers v. CIT : 72 ITR 612 (SC) Re: Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending, if had borrowed any amount on interest that is not of much consequence in the present facts and circumstances as being watchful of it s business interest and to secure the principal amount at least, the assessee gave up the claim of interest income. There is no allegation of untoward benefit to the borrower as the two entities were not known to each other. In similar circumstances, where what to talk of interest, even the principal amount itself had become doubtful to recover, Hon ble Delhi High Court in DIT vs. Brahamputra Capital Financial Services Ltd. (supra) observed :- 5. Identical issue came up before this Court in batch of appeals leading case being Commissioner of Income Tax V. M/s Vasisth Chay Vypapar Ltd. [2011] 196 Taxman 169], this theory of real income was discussed in detail. That was also a case of NBFC where loan/advance given by the said assessee had become NPA and keeping in view the guidelines of RBI interest was not treated as accrued. After taking note of various judgments on the subject, the question was answered in favor of the assessee and against the Revenue. The legal position is summarized in para 17 of the said judgment which reads as und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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