Assessee company had advanced certain amounts being ICDs, which  were doubtful of recovery, and the legal action was initiated against said parties. The said ICDs were shown as doubtful of recovery and no interest was provided on said doubtful ICDs. AO was of the view that, as assessee company has yet not given up its claim, by initiating criminal proceedings and suits for recovery against defaulting parties, assessee  was required to account for interest income as per the mercantile system of accounting, and thus added notional interest on impugned deposits in question, which was upheld by CIT(A).  On Appeal the Tribunal held  that; 

1. Though the assessee company has not given up its claim and was hopeful of recovery, nor the amounts were w/off in books cannot be the determinant factor to hold that interest income has accrued.
2. Furthermore, in the instant case as the department itself has accepted in other years, that no addition qua the interest income on accrual basis  with respect to ICDs which are doubtful of recovery, addition in the year under consideration cannot be sustained   (AY.2004-05 & 2005-2006)