| Case ID |
029991e4-2624-4bc8-8bd6-883765617976 |
| Body |
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| Case Number |
D-2741 of 1992 |
| Decision Date |
Jan 01, 2002 |
| Hearing Date |
Jan 01, 1992 |
| Decision |
The court held that the entire discounted interest received by the assessee was taxable in the year of receipt, and the Tribunal's decision to allow the spreading of the income over three years was incorrect. The case hinged on the interpretation of the cash accounting system adopted by the assessee and the nature of the interest received. The court emphasized that since the entire amount of interest was received in a lump sum, it could not be deferred to subsequent years for tax purposes. This decision clarified the treatment of discounted interest under the Income-tax Act. |
| Summary |
The case concerns the taxation of discounted interest received by the assessee under the Income-tax Act, 1961, specifically sections 5 and 54E. The Madras High Court ruled that the entire discounted interest received in the assessment year 1992-93 was taxable in that year. The assessee had opted for discounted interest on bonds, which led to a dispute regarding the correct accounting treatment of the interest income. The court determined that the cash accounting system adopted by the assessee required the entire amount to be taxed in the year it was received, rejecting the argument to spread the income over multiple years. This case is significant for tax practitioners as it clarifies the treatment of similar cases involving discounted financial instruments. |
| Court |
Madras High Court
|
| Entities Involved |
National Housing Bank
|
| Judges |
V.S. Sirpurkar,
K. Raviraja Pandian
|
| Lawyers |
T. Ravikumar,
P.P.S. Janarthana Raja
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
A.R. Santhanakrishnan
|
| Citations |
2002 SLD 2614,
(2002) 256 ITR 184
|
| Other Citations |
M.P. Financial Corpn. v. CIT [1987] 165 ITR 765,
M.P. Financial Corpn. v. CIT [1986] 26 Taxman 42 (MP)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
5,
54E
|