Debenture Interest income calculated on amortization basis is accepted on the basis of matching principle.

The assessee has computed his interest income arising on the difference between purchase price of the debenture and redemption price after six years and calculated the income on amortization basis .The issue before the Apex court was whether such interest should be taxed on accrual basis in the year of allotment of debenture it self or whether it should be taxed on spread over basis. The Apex court referring the Judgment of Bombay High Court in Taparia Tools Ltd v. Jt.CIT (2003) 260 ITR 102(Bom.)(High Court), which refers to matching principle , order of Tribunal up held and order of High Court was set aside.(A.Y. 1995‐96)
 Rakesh Shantilal Mardia v. Dy.CIT ( 2012) 210 Taxman 565 /254 CTR 338(SC)