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.

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9152/DEL/2019[2016-17]Status: DisposedITAT Delhi11 Feb 2022AY 2016-17

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…

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9151/DEL/2019[2015-16]Status: DisposedITAT Delhi11 Feb 2022AY 2015-16

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…

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9150/DEL/2019[2014-1]Status: DisposedITAT Delhi11 Feb 2022

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…

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9149/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…

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9148/DEL/2019[2012-13]Status: DisposedITAT Delhi11 Feb 2022AY 2012-13

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…

Vishnu Kumar Garg, Faridabad vs. DCIT Central Circle-4, New Delhi

ITA 9147/DEL/2019[2011-12]Status: DisposedITAT Delhi11 Feb 2022AY 2011-12

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…

Red Fort Shahjahan Properties Pvt. Ltd., New Delhi vs. ACIT, Circle-21(2), New Delhi

In the result, appeal of the assessee is allowed

ITA 742/DEL/2020[2016-17]Status: DisposedITAT Delhi20 Aug 2020AY 2016-17

Bench: Shri N.K. Billaiya & Ms. Suchitra Kamble[A.Ys 2016-17]

For Appellant: Shri Ajay Vohra, Sr. D.RFor Respondent: Shri Jagdish Singh, Sr. D.R

…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, wherein the Hon’ble High Court observed as under: “……….. Where no income has resulted, it cannot be said that income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. Even if the assessee makes a debit entry to that effect, still no income can be said to have accrued to the assessee. If no…

United Shippers Ltd., Mumbai vs. DCIT - 3(3), Mumbai

In the result the appeal filed by the assessee is allowed

ITA 5815/MUM/2018[2015-16]Status: DisposedITAT Mumbai06 Jul 2020AY 2015-16

Bench: Shri Pramod Kumar & Shri Amarjit Singh

Section 143(2)Section 14A

…allabhdas& Co. 46 ITR 144 (SC); - Godhra Electricity Co. Ltd.v. . CIT 225 ITR 746 (SC); - CIT vs. A. Raman & Co. 67 ITR 11(SC); - UCO Bank v. CIT 237 ITR 889 (SC); - Airport Authority of India v. CIT 340 ITR 407 (Del. )(FB); - CIT v. Motor Credit Co. P. Ltd. 127 ITR 572 (Mad.); - JCIT v. Pankaj Oxygen Ltd. 78 TTJ 119 (Nag.) - ACIT vs. Manick Chand Damani 72 TTJ 675 (Cal.). 13.1. After hearing both the parties, we do not find any reason to interfere in the order of ld. CIT(A), because the issue that only real income and not notional income is taxable, is no more resintgra in view of aforementioned decisions, ITA…

DCIT, New Delhi vs. M/S Ircon International Ltd., New Delhi

In the result, all the three appeals of the assessee for A

ITA 3805/DEL/2008[2003-04]Status: DisposedITAT Delhi31 Oct 2019AY 2003-04

Bench: : Shri Bhavnesh Saini & Shri O.P. Kant

Section 80HSection 80I

…os. 69 2234/Del/2005 & 3805/Del/2008 ascertaining whether income had accrued to the assessee one has to find out whether the assessee had a vested right to receive the income. (viii) Reliance has been placed on the decision of CIT Vs. Motor Credit Co. Ltd., 127 ITR 572 where it has been held that where no income has resulted , it cannot be said that the income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. It has also been observed that the mercantile system of accounting can be only relevant only to determine the point of time at which tax liability i…

Ircon International Ltd., New Delhi vs. DCIT, Circle-11(1), Delhi

In the result, all the three appeals of the assessee for A

ITA 705/DEL/2006[2002-2003]Status: DisposedITAT Delhi31 Oct 2019AY 2002-2003

Bench: : Shri Bhavnesh Saini & Shri O.P. Kant

Section 80HSection 80I

…os. 69 2234/Del/2005 & 3805/Del/2008 ascertaining whether income had accrued to the assessee one has to find out whether the assessee had a vested right to receive the income. (viii) Reliance has been placed on the decision of CIT Vs. Motor Credit Co. Ltd., 127 ITR 572 where it has been held that where no income has resulted , it cannot be said that the income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. It has also been observed that the mercantile system of accounting can be only relevant only to determine the point of time at which tax liability i…

DCIT, Circle-11(1) vs. Ircon International Ltd

In the result, all the three appeals of the assessee for A

ITA 2234/DEL/2005[2001-2002]Status: DisposedITAT Delhi31 Oct 2019AY 2001-2002

Bench: : Shri Bhavnesh Saini & Shri O.P. Kant

Section 80HSection 80I

…os. 69 2234/Del/2005 & 3805/Del/2008 ascertaining whether income had accrued to the assessee one has to find out whether the assessee had a vested right to receive the income. (viii) Reliance has been placed on the decision of CIT Vs. Motor Credit Co. Ltd., 127 ITR 572 where it has been held that where no income has resulted , it cannot be said that the income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. It has also been observed that the mercantile system of accounting can be only relevant only to determine the point of time at which tax liability i…

Ircon International Limited, New Delhi vs. ACIT, New Delhi

In the result, all the three appeals of the assessee for A

ITA 3804/DEL/2008[2003-04]Status: DisposedITAT Delhi31 Oct 2019AY 2003-04

Bench: : Shri Bhavnesh Saini & Shri O.P. Kant

Section 80HSection 80I

…os. 69 2234/Del/2005 & 3805/Del/2008 ascertaining whether income had accrued to the assessee one has to find out whether the assessee had a vested right to receive the income. (viii) Reliance has been placed on the decision of CIT Vs. Motor Credit Co. Ltd., 127 ITR 572 where it has been held that where no income has resulted , it cannot be said that the income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. It has also been observed that the mercantile system of accounting can be only relevant only to determine the point of time at which tax liability i…

Ircon International Ltd vs. Addl. CIT, Range-11

In the result, all the three appeals of the assessee for A

ITA 1825/DEL/2005[2001-2002]Status: DisposedITAT Delhi31 Oct 2019AY 2001-2002

Bench: : Shri Bhavnesh Saini & Shri O.P. Kant

Section 80HSection 80I

…os. 69 2234/Del/2005 & 3805/Del/2008 ascertaining whether income had accrued to the assessee one has to find out whether the assessee had a vested right to receive the income. (viii) Reliance has been placed on the decision of CIT Vs. Motor Credit Co. Ltd., 127 ITR 572 where it has been held that where no income has resulted , it cannot be said that the income has accrued merely on the ground that the assessee has been following the mercantile system of accounting. It has also been observed that the mercantile system of accounting can be only relevant only to determine the point of time at which tax liability i…

Asst CIT Cir 6(1)(2), Mumbai vs. Ask Investment Managers P.Ltd, Mumbai

The appeal of the Revenue is allowed for statistical

ITA 534/MUM/2017[2012-13]Status: DisposedITAT Mumbai09 Oct 2018AY 2012-13

Bench: Shri Joginder Singh & Shri G. Manjunathaassessment Year 2012-13 Acit M/S Ask Investment Circle-6(1)(2), Managers Pvt. Ltd. बनाम/ R. No.536, 5Th Floor, 1St Floor Bandbox House, Vs. Aayakar Bhavan, Dr. Ab Road, Worli, M. K. Road, Churchgate, Mumbai-400030 Mumbai-400020 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Aafca2302P Shri Nitin Waghmode-Dr राज"व क" ओर से / Revenue By "नधा"रती क" ओर से / Assessee By Shri J.D. Mistri Sr. Advocate

Section 115JSection 14A

…Vallabhdas & Co. 46 ITR 144 (SC); - Godhra Electricity Co. Ltd. . CIT 225 ITR 746 (SC); - CIT vs. A. Raman & Co. 67 ITR 11(SC); - UCO Bank v. CIT 237 ITR 889 (SC); - Airport Authority of India v. CIT 340 ITR 407 (Del. )(FB); - CIT v. Motor Credit Co. P. Ltd. 127 ITR 572 (Mad.); - JCIT v. Pankaj Oxygen Ltd. 78 TTJ 119 (Nag.) - ACIT vs. Manick Chand Damani 72 TTJ 675 (Cal.). 13.1. After hearing both the parties, we do not find any reason to interfere in the order of ld. CIT(A), because the issue that only real income and not notional income is taxable, is no more res-intgra in view of aforementioned decisions, par…

T.A.Taylor Pvt Ltd., Chennai vs. ACIT, Chennai

In the result, the appeal of the assessee is partly allowed

ITA 622/CHNY/2017[2012-13]Status: DisposedITAT Chennai19 Jul 2018AY 2012-13

Bench: Shri N.R.S. Ganesan & Shri Abraham P. George] आयकर अपील सं./I.T.A. No.622/Chny/2017 "नधा"रण वष" /Assessment Year : 2012-2013. M/S. T.A. Taylor Private Ltd, Vs. The Assistant Commissioner Of No.10/5, Royal Enclave, Income Tax, Besant Avenue Road, Corporate Circle 3(1) Adyar, Chennai. Chennai 600 020. [Pan Aaact 4165G] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. Vijay Kumar Punna

…आयकर अपील"य अ"धकरण, ‘बी’ "यायपीठ, चे"नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘ B’ BENCH : CHENNAI "ी एन.आर.एस. गणेशन, "या"यक सद"य एवं "ी अ"ाहम पी. जॉज", लेखा सद"य के सम" । [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER] आयकर अपील सं./I.T.A. No.622/CHNY/2017 "नधा"रण वष" /Assessment year : 2012-2013. M/s. T.A. Taylor Private Ltd, Vs. The Assistant Commissioner of No.10/5, Royal Enclave, Income Tax, Besant Avenue Road, Corporate Circle 3(1) Adyar, Chennai. Chennai 600 020. [PAN AAACT 4165G] (अपीलाथ"/Appellant) (""यथ"/Respondent) : Shri.R. Vijayaraghavan, Advocate अपी…

ITO 9(1)(3), Mumbai vs. Anchor Residency P.Ltd, Mumbai

In the result, the appeal filed by the revenue is partly allowed

ITA 4407/MUM/2015[2011-12]Status: DisposedITAT Mumbai14 Mar 2018AY 2011-12

Bench: Shri Joginder Singh () & Shri G Manjunatha ()

Section 143(2)Section 36(1)(iii)

…ot be said that he has acquired a right to receive the income or that income had accrued to him. REAL INCOME THEORY Income accrues only when there is a reasonable degree of certainty with regards to its recoverability. CIT v/s. Motor Credit Co. Ltd. - [(1981) 127 ITR 572 (Mad)] It is not the hypothetical accrual of income based on the mercantile system of accounting followed by the assessee that has to be taken into account, but what should be considered is whether the income has really materialized or resulted to the assessee. The question whether real income has materialized to the assessee has to be considered…

M/S. K. Chimanlal & Co., (R.F.), Ahmedabad vs. The Jt.CIT, Range-2, Ahmedabad

In the result, the appeal of the assessee is dismissed

ITA 1281/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad11 Oct 2017AY 2011-12
For Appellant: Shri S.N. Divetia, A.RFor Respondent: Prajna Madam, Sr. D.R
Section 143(2)Section 143(3)Section 234BSection 234DSection 250

…Profit during the year. In support of its contention, the appellant relied on the following judgments: - - Godhra Electric Co. Ltd. vs. CIT 225 ITR 746 (SC). - Highway construction Co. Pvt. Ltd. vs. CIT 199 ITR 702 (Guj.). - CIT vs. Motor Credit Co. Pvt. Ltd. 127 ITR 572. -H. M. Kashi Parekh & Co. vs. CIT 39 ITR 706. - Pune Electric Supply Co. Ltd. vs. CIT 57 ITR 521, 529. - CIT vs. Shoorji Vallabhdas & Co. 46 ITR 144. Decision. The rival submissions have been considered. It is a fact that the appellant -33 advanced interest free loans of Rs.60,85,704/-. The appellant was not able to give convincing reply as to w…

ACIT, New Delhi vs. M/S. Vaish Co-Operative Adarsh Bank Ltd, New Delhi

Appeal is dismissed

ITA 3428/DEL/2014[2010-11]Status: DisposedITAT Delhi09 Oct 2017AY 2010-11

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K.N. Chary

Section 143(3)Section 36(1)(vii)

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI G.D. AGRAWAL, HON’BLE PRESIDENT & SHRI K.N. CHARY, JUDICIAL MEMBER ITA No.-3428/Del/2014 (Assessment Year: 2010-11) vs ACIT Vaish Co-operative Adarsh Bank Ltd. Circle 30(1) 3, Netaji Subhash, Darya Ganj, New Delhi. New Delhi. AABAT7703R Assessee by Sh. M.K. Bhatt, FCA Revenue by Sh. Arun Kumar Yadav, Sr. DR Date of Hearing 18.09.2017 Date of Pronouncement 09.10.2017 ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER Revenue filed this appeal challenging the order dated 28.03.2014 in appeal no. 14/2013-14 passed by the Ld. Commissioner…

Universal Industrial Fund Ltd., Kolkata vs. DCIT, C Ircle- 6, Kolkata

In the result, assessee’s appeal stands partly allowed

ITA 1838/KOL/2010[2007-08]Status: DisposedITAT Kolkata27 May 2016AY 2007-08

Bench: Shri Waseem Ahmed & Shri S.S.Viswanethra Raviassessment Year :2007-08

Section 115JSection 143(3)Section 14A

…IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “A” KOLKATA Before Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member Assessment Year :2007-08 Universal Industrial Fund V/s. DCIT, Circle-6, P7, Ltd. (in the matter of Chowringhee Square, Hilltop Holdings India Kolkata-700 069 Ltd. since amalgamated) 31, Netaji Subhas Road, Klkkata-700 001 [PAN No.AAACU 4032 H] .. अपीलाथ" /Appellant ""यथ"/Respondent अपीलाथ" क" ओर से/By Appellant Shri D.S.Damle, FCA Shri Sallong Yaden ACIT,SR-DR ""यथ" क" ओर से/By Respondent 27-04-2016 सुनवाई क" तार"ख/Date of Hearing 27-05-2016 घोषणा क" तार"ख/…

ACIT, New Delhi vs. M/S. the Delhi State Co-Operative Bank Ltd., New Delhi

In the result, appeal of the revenue is dismissed

ITA 518/DEL/2014[2010-11]Status: DisposedITAT Delhi10 Feb 2016AY 2010-11

Bench: Sri C.M.Garg, Jm & Sri O.P. Kant, Am Ita No. 518/Del./2014 : Asstt. Year : 2010-11

For Appellant: Sh. S.C.GuptaFor Respondent: Sh. Sunil Chander Sharma, CIT, DR
Section 36Section 36(1)(viia)Section 80PSection 80P(2)(a)

…O. 2537/Del/2012 (4) TRO Vs Custodian, 293 ITR 369 (Del) (5) Barkha Investment & Trading Co P Ltd Vs CIT, 281 ITR 31 (Guj) (6) CIT Vs Nanital Bank Ltd, 309 ITR 335 (Uttarakhand) (7) CIT Vs Elgi Finance Ltd, 293 ITR 357 (Mad) (8) CIT V s Motor Credit Co P Ltd, 127 ITR 572 (Mad) [1981] (9) CIT Vs Coimbatore Lakshmi Inv. & Finance Co Ltd, 331 ITR 229 (Mad) [2011] 8.1 We find that as per RBI prudential norms where the principal amount is doubtful of recovery and borrower is not paying, income from interest on such accounts should not be credited to its profit and loss account. The assessee is adopting the same accoun…