Case Law Details
RELEVANT PARAGRAPH
We do not find any error in the approach of the authorities below. Merely because the interest was debited in the books of accounts maintained on mercantile basis would not mean that the interest had become due and accrued because admittedly the interest liability would become due not during the relevant previous year but only for the first time on 18.11.1996. Thus, interest cannot be said to have accrued to become due and payable in the relevant previous year. The stand of the assessee is incongruous because on the one hand it claims that interest became due and accrued in the relevant previous year however in the same breadth it admits that the same would be due and payable only with effect from 18.11.1996. The concept of debiting the books maintained on mercantile basis is on the principle that the payment has become due and payable and since it has become payable it is therefore debited in the books of accounts. Admittedly, in the present case the interest was not due and payable from the relevant previous year. Further, the provision of Section 43B(d) directly and categorically dis-entitles the assessee company to claim benefit of interest deduction because with respect to interest due and payable to a financial institution such as the IFCI till the interest is actually paid, the same cannot be allowed as a deduction. reproduced below:-
“43B. Certain deductions to be only on actual payment
Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of —
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