Law:

Section:

I. Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1982-83 - Assessee, following mercantile system of accounting, claimed exclusion of interest accrued but not due during relevant previous year - Assessing Officer held that once interest had accrued, it had to be included in income - On appeal, Tribunal held that very term 'accrued but not due' would show that right to receive interest had not arisen to assessee, and interest was receivable only from 1st of April of next year and, therefore, interest accrued in relevant assessment year was not assessable to tax for assessee who was following mercantile system of accounting - Whether, on facts, Tribunal had taken correct decision - Held, yes II. Section 80HH of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertaking, etc., in backward areas - Assessment year 1992-93 - Whether for calculating ten assessment years for purpose of deduction under section 80HH in respect of new industrial undertaking, natural sequence of ten years must be followed - Held, yes - Whether fact that assessee had changed previous year and there was no assessment for a particular assessment year, would not, in any way, change manner in which ten assessment years should be calculated - Held, yes FACTS-I The assessee, following the mercantile system of accounting, claimed exclusion of interest on the ground that it had accrued but had not been received in the relevant previous year. The Assessing Officer rejected the assessee's claim. On appeal, the Commissioner (Appeals) upheld the Assessing Officer's order, holding that once the interest had accrued, it had to be included as income. On second appeal, the Tribunal allowed the assessee's claim. On the revenue's appeal : HELD-I The Tribunal rightly held that the opinion of the Commissioner (Appeals) was not correct since the very term 'accrued but not due' would show that the right to receive the interest had not arisen to the assessee and the interest was receivable only from the 1st of April of the next year. [Para 7] Therefore, the Tribunal was right in holding that the interest that had accrued in the relevant…

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