Assesses has received interest income of Rs 5,00,000/- for the period of 10/2001 to 12/2006, in the year AY 2007-08. Now IT dept has clubbed this whole amount with the return income of AY 2007-08.
Now my question
Is it correct to club whole amount (Rs.500000) with the return income of AY2007-08?
Or
This total interest income falls in AY 2002-03 to AY 2007-08? (I.e. can it be club with return income ofAY2002-03 to AY2007-08?)
Pl advice.
the interst income receivable can either be shown on accrual basis or on receipt basis. If it shown on receipt basis, then whole of the itnerst of Rs 5lacs pertaining to years 01-02-06-07 will be shown in F.Y. 2006-07.
But if it is shonw on accrual basis then it would get included in each year's income.
Interest on fixed deposit is chargeable either on receipt basis or accrual basis. If the assessee claimed it on receipt basis, then entire amount of interest would be taxable in their hands in the year it is actually received.
In other case, if the assessee claimed it on accrual basis of interest, then it could have been charged on accrual basis in the previous years.
Therefore, it is important to note that the nature of taxability of income depends on either actual receipt basis or accrual basis depending on the assessee they are claiming for.
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