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TMI Blog1994 (1) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... e." 2. The relevant facts and the basis on which the Assessing Officer made the addition are stated in the following portion of the assessment order as under : " On going through the notes to account attached with profit and loss account, it has been noticed that company has included interest of Rs. 2,24,868 into interest suspense account on liability side of the Balance Sheet. It has been explained in the notes that Rs. 2,24,868 is estimated to be the balance amount of interest receivable on accrual basis in respect of the earlier financial years ended up to 30-6-1988 after excluding therefrom the irrecoverable amount. In view of the company, the said sum has not been taken credit of in the P & L A/c for the year as it is not the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is accounted on cash basis are accrued in the year ended on 31-3-1989. According to the above opinion the company had accounted Rs. 87,959.19 interest pertaining to earlier years accounted on cash basis in earlier year but received in the year ended on 31-3-1989 had accounted the same as the income of the year and offered the same to taxation. The balance of interest of Rs. 2,24,868 will be accounted in the year of receipt and will be offered to taxation in the year of receipt along with the interest which will accrue for that year." 2.1 The Assessing Officer formed the opinion that since now the assessee had taken the credit to suspense account, it could not be said that the interest income had accrued in earlier year. 3. In appeal, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Departmental Representative relied upon three judicial pronouncements. In our opinion, they are not applicable to the facts of the case or rather the principle laid down therein is either not germane to the issue or support the case of the assessee. 5.2 In the case of CIT v. Confinance Ltd. [1973] 89 ITR 292 (Bom.), the facts were as follows: "The assessee was a limited company carrying on money-lending and banking business. It followed mercantile system of accounting. For the accounting year ending March 31, 1959, the company stated that no credit was taken in its balance sheet in respect of interest on several loans advanced by it as the interest payment had remained unpaid from March 31, 1956. For the assessment year 1959- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso allowed deduction of interest payable by the assessee." On reference the High Court held that the addition of interest accruing on amount owed to the assessee was justified. Here again it was an admitted position that the interest had accrued during the previous year as per the terms of the agreement. 5.4 The next case relied upon was in the case of CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC) where the principle laid down was that if the method of accounting adopted does not disclose true and proper income, the Assessing Officer is entitled to and is duty-bound to adopt appropriate computation to determine true income. This case involves the issue regarding the valuation of stock. It does not throw any light on the issue w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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