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Issues Involved:
The judgment addresses the following Issues: 1. Whether there was material to hold that there was no agreement to charge interest from the parties? 2. Whether the Tribunal was justified in holding that no interest accrued to the assessee in the relevant assessment year? Issue 1: The relevant assessment year is 1974-75, where the assessee, a selling agent, advanced amounts to three companies under the same management. The debtor companies stopped crediting interest to the assessee after June 30, 1969, and did not claim interest as a deduction. The Income-tax Officer added interest to the assessee's income based on past practices, but the Tribunal overturned this decision. The Tribunal found no evidence of an agreement for interest payment between the parties, noting the financial difficulties of the debtor companies as the reason for ceasing interest charges. The absence of a written or implied agreement led the court to conclude that interest could not be added to the assessee's income. Issue 2: The Tribunal's decision to set aside the Income-tax Officer's and Appellate Assistant Commissioner's orders was upheld by the court. The court emphasized the lack of evidence supporting the presumption of an agreement to pay interest, especially since the assessee was not a money-lender. The court ruled in favor of the assessee, stating that without concrete proof of an agreement, interest could not be deemed to have accrued to the assessee. The court answered both questions in the affirmative, in favor of the assessee, and awarded costs to the assessee. This judgment highlights the importance of establishing a clear agreement for interest payments and the necessity of concrete evidence to support claims of interest accrual, especially in the absence of a money-lending context.
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