Assessee has excluded interest income received in advance, on discounting of bills against letter of credit , while filing the return of income . The AO assessed as income of the relevant year which was affirmed by the Tribunal . On appeal to the Court allowing the appeal of the assessee the Court held that income received in advance in nature of interest income on discounting of bills against letter of credit was to be subjected to taxation on accrual basis and not on receipt basis. (AY. 2003-04)
Karur Vysya Bank Ltd. v. Add.CIT( 2020) 196 DTR 168 / (2021) 276 Taxman 463 / 318 CTR 94 (Mad.)(HC)
S. 5 : Scope of total income – Accrual of income – Advance on discounting of bills – Method of accounting – Not taxable as income of the relevant year [ S. 4, 145 ]