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JUDGMENT L. Narasimha Reddy, J. - These two appeals filed under Section 260A of the Income Tax Act, 1961 (for short the Act) arise out of common order dated 09-11-2001 passed by the Visakhapatnam Bench of the Income Tax Appellate Tribunal (for short the Tribunal) in I.T.A No. 2254 and 2257 of 1996 and batch. The assessee is the appellant. 2. The appellant was functioning as a Managing Director of M/s. A.P. Tanneries Limited (for short, the 1st company). He gave loan of certain amounts to the said company as well as to another company by name M/s. Associated Tanners (for short, the 2nd company). The latter was paying interest on the amount advanced by him regularly, whereas the former was just showing the accumulated interest, in its account books without making actual payment. It was also his case that even while showing the interest payable to him in the account books, the 1st company deducted tax at source (TDS) on the amount of interest payable and issued certificates, in relation thereto. 3. In the returns filed by him, the appellant was adopting a hybrid procedure. While in respect of his transaction with the 1st company, he adopted cash system, as regards the transaction with the 2nd company, he adopted the mercantile system. The result was that he did not pay the tax on the interest payable to him by the 1st company, even while he enjoyed the entire benefit of TDS made in that behalf. There is no dispute about the interest paid by the 2nd company, since the appellant has shown the same as income and paid tax thereon. 4. The assessing officer took objection to this and passed an order of assessment treating the interest payable by the 1st company on transfer basis, as income and levied tax. The same result ensued for various financial years. Aggrieved by that, the appellant filed appeals before the Commissioner of Income Tax, Visakhapatnam. The appeals were dismissed. Thereupon, the appellant filed further appeals before the Tribunal. Through order dated 09-11-2001, the Tribunal dismissed the appeals. 5. Learned counsel for the appellant submits that it is open for an assessee to adopt partly the cash system and partly, the mercantile system and even…

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