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Accrual of income not aligned to TDS certificates

Where the fixed deposits have been foreclosed in April 2007 or after, it could be taxable only in the assessment year (AY) 2008-09, that is, as income of financial year 2007-08. The liability cannot be postponed by another year merely because TDS certificates are expected to be received after March 31, 2008. In fact, banks need not wait for the issue of TDS certificates till the end of the year, for tax, that has been deducted and deposited. TDS certificates are required to be issued under Rule 31 in respect of interest paid in Form 16A within one month from the end of the month in which the sum had been credited or paid, so that the bank should not wait for the next year. Even if they fail to issue certificates promptly and have issued the same only during the next year, liability does not get postponed notwithstanding the belated issue of TDS certificates. The assessing officer cannot refuse to give credit for tax deducted, though certificates are belated. As for the question in the first part of the query, the reader can account for interest on an accrual basis, though not received. It can be accounted on the cash basis on the date of foreclosure or maturity at the choice of the assessee.

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