The assessee follow mercantile system of accounting. He purchased 8% government of India (Taxable) saving bonds in 2011 and showing interest every year . Bonds matured in 2017 and TDS was deducted on whole interest. AO wants to add whole interest in the year of maturity on the basis of 26AS.
CAN U PLEASE PROVIDE ANY SUPPORTING EVIDENCE OR CASE LAW IN RELATING TO THE SAID CASE.
I feel the decision by ITAT Bangalore in K. Nagendrasa & Ors. v. Dy. CIT has made it clear that the assessees has the right to choose the method (cash or accrual), unless the statutory provisions prescribes any other method to be followed mandatorily. There being no such mandate by the statutory authorities, assessees are entitled to recognize the interest income on RBI Bonds, either on accrual basis or on cash basis.
T R SOOD & CO
New Delhi
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