CIT v. Motor Credit Co. P. Ltd.

127 ITR 572High Court1981#2760 most cited

What is CIT v. Motor Credit Co. P. Ltd. authority for?

Interest income from loans does not accrue for tax purposes when neither the principal loan amount nor the interest has been recovered, even if loans were assumed to have been advanced. For income to accrue, there must be a real right to receive it.

42

judgments rely on this decision, according to BharatTax’s citation analysis of 366,005 Indian tax judgments — from 2010 to 2025.

Also referred to as

CIT v. Motor Credit Co. P. Ltd. · 127 ITR 572 · accrual of interest income · interest not recovered · loans not recovered · income recognition · section 145(1) · mercantile system · doubtful recovery · addition of interest income

Sections most often in play

Section 143(3)Section 132Section 132(4)Section 132(4A)Section 142(1)Section 143(2)Section 144Section 14A

Issues it is cited on

section 127(1)section 10(2)(xv)section 145(1)section 114section 70section 10(1)section 211section 10(2)right to receivesection 40(b)section 42dumb documents

Judgments citing CIT v. Motor Credit Co. P. Ltd.

Bysani Srinath Mamatha, Bengaluru vs. Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bengaluru

In the result, the appeals of the assessee for

ITA 410/BANG/2025[2018-19]Status: DisposedITAT Bangalore09 Oct 2025AY 2018-19

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)
Section 131Section 132Section 132(4)Section 153A

…idavit and subsequent returns showed that no such income was received. Even if loans were assumed to have been advanced, interest thereon could not be said to have accrued when neither the loans nor the interest were recovered, relying on Motor Credit Company 127 ITR 572 (Madras). In sum and substance, the Id. AR contended that the addition was based purely on suspicion, contradictory statements, and unsubstantiated documents. As there was no real evidence of interest income, the entire addition deserved to be deleted. 11. On the other hand, the learned DR before us reiterated the findings contained in the assess…

Bysani Srinath Mamatha, Bengaluru vs. Joint Commissioner of Income Tax (OSD) Central Circle-1(3), Bengaluru

In the result, the appeals of the assessee for Assessment Years

ITA 407/BANG/2025[2015-16]Status: DisposedITAT Bangalore09 Oct 2025AY 2015-16

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)
Section 131Section 132Section 132(4)Section 153A

…such income was received. Even if loans were assumed to have been advanced, interest thereon could not be said to have accrued when neither the loans nor the interest were recovered, relying on Motor . ITA No.399-410/Bang/2025 Page 28 of 33 Credit Company 127 ITR 572 (Madras). In sum and substance, the ld. AR contended that the addition was based purely on suspicion, contradictory statements, and unsubstantiated documents. As there was no real evidence of interest income, the entire addition deserved to be deleted. 11. On the other hand, the learned DR before us reiterated the findings contained in the asses…

Bysani Adinarayaguptha Srinath, Bengaluru vs. Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bengaluru

In the result, the appeals of the assessee for Assessment Years

ITA 402/BANG/2025[2016-17]Status: DisposedITAT Bangalore09 Oct 2025AY 2016-17

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)
Section 131Section 132Section 132(4)Section 153A

…such income was received. Even if loans were assumed to have been advanced, interest thereon could not be said to have accrued when neither the loans nor the interest were recovered, relying on Motor . ITA No.399-410/Bang/2025 Page 28 of 33 Credit Company 127 ITR 572 (Madras). In sum and substance, the ld. AR contended that the addition was based purely on suspicion, contradictory statements, and unsubstantiated documents. As there was no real evidence of interest income, the entire addition deserved to be deleted. 11. On the other hand, the learned DR before us reiterated the findings contained in the asses…

JCIT(OSD) Central Circle 1, Jhandewalan vs. Sahara India Real Estate Corporation Ltd., Lucknow

ITA 1085/DEL/2024[2017-18]Status: DisposedITAT Delhi07 Oct 2025AY 2017-18

Bench: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman

For Appellant: Sh. Ajay Vohra, Sr. Adv. &For Respondent: Sh. Mahesh Kumar, CIT-DR
Section 143(3)

…to be deleted. For the above proposition, the appellant would like to rely on the following cases:- 1. Jwala Prasad Radha Kishan vs. CIT 198 ITR 415 (Alld) 2. Highway Construction Pvt. Ltd. vs. CIT 111 CTR 143 (Guwahati). 3. CIT vs. Motor Credit Co. Pvt. Ltd, 127 ITR 572 (Mad.). 4. CIT vs. Devi Films (P) Ltd. 143 ITR 386 (Mad.) 5. S.A. Builders Ltd. vs. CIT(A) 288 ITR 1 (SC). 6. CIT vs. Hotel Savera 239 ITR 795 For the proposition that if no interest has been charged in the preceding year, the same cannot be considered during the year and the inquiries has to be limited to the increase in current year only. For t…

Indian Coal Agency, Kolkata vs. DCIT, Circle-35, Kolkata

In the result, the appeal for AY 2013-14 is partly allowed

ITA 868/KOL/2018[2015-16]Status: DisposedITAT Kolkata20 May 2025AY 2015-16

Bench: Sonjoy Sarma & Sri Rakesh Mishra

Section 143(3)Section 14A

…ems of accounting which may be called hybrid or heterogeneous in which certain elements and incidents of the cash and mercantile systems are combined. 6.2 Further, in Commissioner of Income-tax vs. Motor Credit Co. (P.) Ltd. [1981] 6 Taxman 63 (Madras)/[1981] 127 ITR 572 (Madras) it has been held that: Regular mode of accounting only determines the mode of computing taxable income and point of time at which the tax liability is attracted. It cannot be relied on to determine whether income has, in fact, resulted or materialised in the assessee's favour, nor can it affect the range of taxable income or the ambit…

Indian Coal Agency, Kolkata vs. Principal CIT, Circle - 12, Kolkata

In the result, the appeal for AY 2013-14 is partly allowed

ITA 867/KOL/2018[2013-14]Status: DisposedITAT Kolkata20 May 2025AY 2013-14

Bench: Sonjoy Sarma & Sri Rakesh Mishra

Section 143(3)Section 14A

…ems of accounting which may be called hybrid or heterogeneous in which certain elements and incidents of the cash and mercantile systems are combined. 6.2 Further, in Commissioner of Income-tax vs. Motor Credit Co. (P.) Ltd. [1981] 6 Taxman 63 (Madras)/[1981] 127 ITR 572 (Madras) it has been held that: Regular mode of accounting only determines the mode of computing taxable income and point of time at which the tax liability is attracted. It cannot be relied on to determine whether income has, in fact, resulted or materialised in the assessee's favour, nor can it affect the range of taxable income or the ambit…

DCIT, Circle-35, Kolkata vs. M/S. Indian Coal Agency, Kolkata

In the result, the appeal for AY 2013-14 is partly allowed

ITA 1258/KOL/2018[2015-16]Status: DisposedITAT Kolkata20 May 2025AY 2015-16

Bench: Sonjoy Sarma & Sri Rakesh Mishra

Section 143(3)Section 14A

…ems of accounting which may be called hybrid or heterogeneous in which certain elements and incidents of the cash and mercantile systems are combined. 6.2 Further, in Commissioner of Income-tax vs. Motor Credit Co. (P.) Ltd. [1981] 6 Taxman 63 (Madras)/[1981] 127 ITR 572 (Madras) it has been held that: Regular mode of accounting only determines the mode of computing taxable income and point of time at which the tax liability is attracted. It cannot be relied on to determine whether income has, in fact, resulted or materialised in the assessee's favour, nor can it affect the range of taxable income or the ambit…

The Commissioner of Income Tax vs. M/S Punjab Bone Mills

In the result, the appeal

ITR/99/1984HC Punjab & Haryana23 Oct 2024

Bench: This Court Invited Attention To The Decision Ome-Tax Vs. Punjab Bone Mills, (Punjab & Haryana) Wherein Eference No.37/1984 Relating To

…and integrity of this document ITR-99-1984 (O r c in M a th a a a o a f w r c c th to A a a in R th th u a a C C O&M) Page 6 of 8 related to the quantification of a cited by the ITO in the assessment n support of this submission. It wa Madras decision in 127 ITR 572 w and that decision would not apply he assessee. 6.1 We have considered the assessee on our inquiry informed available the cash incentive sch assessee but Shri Anant Narayanan of the chart, the particulars of above, that a claim for cash incen filled at the end of the each quarte will be admissible only when th required application each quart…

M/S Bellary Iron-Ores Private Limited, Bellary vs. The Assistant Commissioner of Income Tax Circle-1, Bellary

ITA 15/BANG/2019[2015-16]Status: DisposedITAT Bangalore20 Sept 2023AY 2015-16

Bench: Shri Chandra Poojari & Ms. Madhumita Royassessment Year: 2014-15

For Appellant: Shri Shivprasad Reddy, A.RFor Respondent: Shri D.K. Mishra, D.R
Section 102Section 139(1)Section 173Section 194ASection 226(3)

…ITA No.1540/Bang/2018 & M/s. Bellary Iron Ores Pvt. Ltd., Bellary IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER Assessment Year: 2014-15 M/s. Bellary Iron-Ores Pvt. Ltd. Mine Owners, Modi Bhavan No.60/356A, Hospet Road, Allipura ITO Ward-2 Vs. Bellary 583 104 Hosapete PAN NO : AAACB7278E APPELLANT RESPONDENT Assessment Year: 2015-16 M/s. Bellary Iron-Ores Pvt. Ltd. Mine Owners, Modi Bhavan No.60/356A, Hospet Road, Allipura ACIT, Circle-1 Vs. Bellary 583 104 Bellary PAN NO : AAACB7278E APPELLANT RESPONDENT A…

M/S Bellary Iron-Ores Pvt Ltd, Bellary vs. The Income Tax Officer Ward-2, Hospet

ITA 1540/BANG/2018[2014-15]Status: DisposedITAT Bangalore20 Sept 2023AY 2014-15

Bench: Shri Chandra Poojari & Ms. Madhumita Royassessment Year: 2014-15

For Appellant: Shri Shivprasad Reddy, A.RFor Respondent: Shri D.K. Mishra, D.R
Section 102Section 139(1)Section 173Section 194ASection 226(3)

…ITA No.1540/Bang/2018 & M/s. Bellary Iron Ores Pvt. Ltd., Bellary IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER Assessment Year: 2014-15 M/s. Bellary Iron-Ores Pvt. Ltd. Mine Owners, Modi Bhavan No.60/356A, Hospet Road, Allipura ITO Ward-2 Vs. Bellary 583 104 Hosapete PAN NO : AAACB7278E APPELLANT RESPONDENT Assessment Year: 2015-16 M/s. Bellary Iron-Ores Pvt. Ltd. Mine Owners, Modi Bhavan No.60/356A, Hospet Road, Allipura ACIT, Circle-1 Vs. Bellary 583 104 Bellary PAN NO : AAACB7278E APPELLANT RESPONDENT A…

DCIT, New Delhi vs. M/S. Sahara India Power Corporation Ltd., Pune

In the result, the appeal filed by the revenue for the AY 2005-06 in I

ITA 5067/DEL/2013[2005-06]Status: PendingITAT Delhi28 Apr 2023AY 2005-06

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar Us

For Appellant: Shri Ajay VohraFor Respondent: Shri Kanv Bali

…TR 746 (SC) • CIT v. Excel Industries Ltd :358 ITR 295 (SC) • CIT v. Shoorji Vallabhdas &Co : 46 ITR 144 (SC) • Airport Authority of India v. CIT : 340 ITR 407 (Del.) • CIT v. Ferozepur Finance (P.) Ltd : 124 ITR 619 (P&H) • CIT v. Motor Credit Co. (P.) Ltd : 127 ITR 572 (Mad.) 37. In the aforesaid circumstances, where the income of the Assessee never materialized and agreement under consideration was subsequently cancelled, the ld. A.R. submitted that there arises no question of bringing to tax any hypothetical income; therefore, the addition made by the assessing officer and sustained by the CIT(A) deserves to…

Sahara India Power Corporation Ltd, Pune vs. DCIT, New Delhi

In the result, the appeal filed by the revenue for the AY 2005-06 in I

ITA 1155/DEL/2009[2004-05]Status: DisposedITAT Delhi28 Apr 2023AY 2004-05

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar Us

For Appellant: Shri Ajay VohraFor Respondent: Shri Kanv Bali

…TR 746 (SC) • CIT v. Excel Industries Ltd :358 ITR 295 (SC) • CIT v. Shoorji Vallabhdas &Co : 46 ITR 144 (SC) • Airport Authority of India v. CIT : 340 ITR 407 (Del.) • CIT v. Ferozepur Finance (P.) Ltd : 124 ITR 619 (P&H) • CIT v. Motor Credit Co. (P.) Ltd : 127 ITR 572 (Mad.) 37. In the aforesaid circumstances, where the income of the Assessee never materialized and agreement under consideration was subsequently cancelled, the ld. A.R. submitted that there arises no question of bringing to tax any hypothetical income; therefore, the addition made by the assessing officer and sustained by the CIT(A) deserves to…

Sahara India Power Corporation Ltd., Pune vs. Assistant Commissioner of Income-Tax

In the result, the appeal filed by the revenue for the AY 2005-06 in I

ITA 109/PUN/2007[2003-04]Status: DisposedITAT Delhi28 Apr 2023AY 2003-04

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar Us

For Appellant: Shri Ajay VohraFor Respondent: Shri Kanv Bali

…TR 746 (SC) • CIT v. Excel Industries Ltd :358 ITR 295 (SC) • CIT v. Shoorji Vallabhdas &Co : 46 ITR 144 (SC) • Airport Authority of India v. CIT : 340 ITR 407 (Del.) • CIT v. Ferozepur Finance (P.) Ltd : 124 ITR 619 (P&H) • CIT v. Motor Credit Co. (P.) Ltd : 127 ITR 572 (Mad.) 37. In the aforesaid circumstances, where the income of the Assessee never materialized and agreement under consideration was subsequently cancelled, the ld. A.R. submitted that there arises no question of bringing to tax any hypothetical income; therefore, the addition made by the assessing officer and sustained by the CIT(A) deserves to…

Global Consultants & Designers Pvt. Ltd., New Delhi vs. ITO Ward 11(4), New Delhi

The appeal is allowed

ITA 1424/DEL/2019[2015-16]Status: DisposedITAT Delhi25 Jan 2023AY 2015-16

Bench: Sh. Shamim Yahya & Sh. Anubhav Sharmaita No.1424/Del/2019, A.Y. 2015-16

Section 133(6)Section 143(2)Section 143(3)

…s not been considered and he relied following case laws :- Re: No Accrual of income if there is uncertainty in collection thereof 1. CIT v. Excel Industries Ltd. 358 ITR 295 (SC) 2. CIT v. Balbir Singh Maini:398 ITR 531(SC) 3. CIT v. Motor Credit Co. (P) Ltd. 127 ITR 572 (Mad.) [SLP filed by the revenue has been dismissed vide SLP (Civil) No. 2806 of 1981 (149 ITR (St. 93)] 4. CIT v. Ferozepur Finance (P) Ltd. 124 ITR 619 (P&H) [SLP filed by the revenue has been dismissed vide SLP (Civil) No. 8158 of 1981 [144 ITR (St.) 50]. Re: Interest on ICDs which had had become NPA could not be said to have been accrued to t…

Asian Paints Ltd, Mumbai vs. Addl CIT Ltu, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 655/MUM/2017[2011-12]Status: DisposedITAT Mumbai28 Jul 2022AY 2011-12

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Asian Paints Ltd., V. Addl. Cit – Ltu – 2 6A, Shantinagar 29Th Floor, World Trade Centre Santacruz (East) Cuffe Parade, Mumbai - 400005 Mumbai – 400055 Pan: Aaaca3622K (Appellant) (Respondent) Addl. Cit – Ltu – 2 V. M/S. Asian Paints Ltd., Centre-1, 29Th Floor 6A, Shantinagar World Trade Centre Santacruz (East) Cuffe Parade, Mumbai - 400005 Mumbai – 400055 Pan: Aaaca3622K (Appellant) (Respondent)

For Appellant: Shri Madhur AgarwalFor Respondent: Shri S.K. Das
Section 115OSection 14A

…ssessee a right to receive the income it can be said to have accrued to him, though it may be received later, on its being ascertained. Reliance is also placed on the decision of the Hon'ble High Court in the case of CIT, Tamilnadu Vs Motor Credit Co Pvt Ltd (127 ITR 572). In this judgment, the Hon'ble High Court has held, inter alia, the following "The regular mode of accounting determines only the mode of computing the taxable income and the point of time at which the tax liability is attracted. It cannot determine or affect the range of taxable income or the ambit of taxation. Where no income has resulted it c…

Gujarat State Land Development Corporation Ltd., Gandhinagar vs. The Dy.CIT, Gandhinagar Circle, Gandhinagar

Appeal is allowed

ITA 2632/AHD/2015[2012-13]Status: DisposedITAT Ahmedabad23 Feb 2022AY 2012-13
For Appellant: Ms. Arti N. Shah, A.RFor Respondent: Shri Mohd Usman, CIT/DR
Section 250(6)

…the proposition that where the collectability of income was uncertain, the income could not be said as accrued: (1) CIT vs. Eicher Ltd. [2010] 320 ITR 410 (Delhi) (2) CIT vs. Abbas Wazir (P.) Ltd. [2005] 274 ITR 448 (3) CIT vs. Motor Credit Co. P. Ltd. [1981] 127 ITR 572 (Mad.) (4) CIT vs. Giriraj Udyog (P.) Ltd. [2005] 273 ITR 495 (All.) (5) CIT vs. Woodward Governor India P. Ltd. [2009] 312 ITR 254 (SC) (6) Order of the High Court of Gujarat in case of Gujarat Insecticides Ltd. vs. Asst.CIT (7) CIT vs. Ganga Charity Trust Fund [1986] 162 ITR 612 (Guj.) (8) ACIT vs. Coromandal Investment P. Ltd. [2009] 316 ITR 1…

Gujarat State Land Development Corporation Ltd., Gandhinagar vs. The Dy.CIT, Gandhinagar Circle, Gandhinagar

Appeal is allowed

ITA 2630/AHD/2015[2008-09]Status: DisposedITAT Ahmedabad23 Feb 2022AY 2008-09
For Appellant: Ms. Arti N. Shah, A.RFor Respondent: Shri Mohd Usman, CIT/DR
Section 250(6)

…the proposition that where the collectability of income was uncertain, the income could not be said as accrued: (1) CIT vs. Eicher Ltd. [2010] 320 ITR 410 (Delhi) (2) CIT vs. Abbas Wazir (P.) Ltd. [2005] 274 ITR 448 (3) CIT vs. Motor Credit Co. P. Ltd. [1981] 127 ITR 572 (Mad.) (4) CIT vs. Giriraj Udyog (P.) Ltd. [2005] 273 ITR 495 (All.) (5) CIT vs. Woodward Governor India P. Ltd. [2009] 312 ITR 254 (SC) (6) Order of the High Court of Gujarat in case of Gujarat Insecticides Ltd. vs. Asst.CIT (7) CIT vs. Ganga Charity Trust Fund [1986] 162 ITR 612 (Guj.) (8) ACIT vs. Coromandal Investment P. Ltd. [2009] 316 ITR 1…

Gujarat State Land Development Corporation Ltd., Gandhinagar vs. The Dy.CIT, Gandhinagar Circle, Gandhinagar

Appeal is allowed

ITA 2538/AHD/2014[2011-12]Status: DisposedITAT Ahmedabad23 Feb 2022AY 2011-12
For Appellant: Ms. Arti N. Shah, A.RFor Respondent: Shri Mohd Usman, CIT/DR
Section 250(6)

…the proposition that where the collectability of income was uncertain, the income could not be said as accrued: (1) CIT vs. Eicher Ltd. [2010] 320 ITR 410 (Delhi) (2) CIT vs. Abbas Wazir (P.) Ltd. [2005] 274 ITR 448 (3) CIT vs. Motor Credit Co. P. Ltd. [1981] 127 ITR 572 (Mad.) (4) CIT vs. Giriraj Udyog (P.) Ltd. [2005] 273 ITR 495 (All.) (5) CIT vs. Woodward Governor India P. Ltd. [2009] 312 ITR 254 (SC) (6) Order of the High Court of Gujarat in case of Gujarat Insecticides Ltd. vs. Asst.CIT (7) CIT vs. Ganga Charity Trust Fund [1986] 162 ITR 612 (Guj.) (8) ACIT vs. Coromandal Investment P. Ltd. [2009] 316 ITR 1…

ACIT, Central Circle-04, New Delhi vs. Vishnu Kumar Garg, Faridabad

ITA 9449/DEL/2019[2014-15]Status: DisposedITAT Delhi11 Feb 2022AY 2014-15

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Shri Gurjeet Singh, C.A. &For Respondent: Smt. Sushma Singh, CIT-DR
Section 127(1)Section 132Section 142(1)Section 143(2)Section 153ASection 69A

…an/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. Our view is fortified from the decision of the Hon'ble Madras High Court in the case of CIT v. Motor Credit Co. P. Ltd.: 127 ITR 572. 52 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad. 17. xxx 18. xxx 19. Considering the facts in totality in the light of the judicial decision discussed hereinabove, we are of the considered view that on given set of facts there is no accrual of interest even though the assessee's following the mercantile syste…

ACIT, Central Circle-04, New Delhi vs. Vishnu Kumar Garg, Faridabad

ITA 9448/DEL/2019[2013-14]Status: DisposedITAT Delhi11 Feb 2022AY 2013-14

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Shri Gurjeet Singh, C.A. &For Respondent: Smt. Sushma Singh, CIT-DR
Section 127(1)Section 132Section 142(1)Section 143(2)Section 153ASection 69A

…an/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. Our view is fortified from the decision of the Hon'ble Madras High Court in the case of CIT v. Motor Credit Co. P. Ltd.: 127 ITR 572. 52 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad. 17. xxx 18. xxx 19. Considering the facts in totality in the light of the judicial decision discussed hereinabove, we are of the considered view that on given set of facts there is no accrual of interest even though the assessee's following the mercantile syste…

CIT v. Motor Credit Co. P. Ltd. (127 ITR 572) — Cited in 42 Judgments | BharatTax