1987 (8) TMI 136

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..... learly emerged when we formulated the claim as interest and the learned representative of the assessee at once took the stand that it was not interest but risk or anticipated loss only calculated as interest. How this problem has arisen we shall presently see. 2. The starting point is that the assessee is an exporter of goods to Sudan. According to the assessee, the risk regarding obtaining payment for exports to that country is large and it is this particular factor which has occasioned the claim of the assessee as risk or anticipated loss. The assessee has tried to substantiate this by pointing out the letter dated 29-8-1979/4-9-1979 from the Export Credit & Guarantee Corporation Limited to the assessee, wherein under the column 'Terms' .....

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..... llen due to the bank in the period relevant to the assessment year 1980-81 and he has also recorded that the assessee had stated vide its letter dated 31-1-1983 that this amount is only an expected loss on account of interest for periods after 31-12-1979 on amounts payable to the bank on account of discounting of export sale bills. The Income-tax Officer disallowed the claim on the ground that the liability for interest had not arisen in the relevant period. 4. Before the CIT (Appeals), the assessee contended that the assessee was likely to incur this interest amount on account of the delay which was likely to occur and so the liability for that interest had to be provided for. He had argued that this amount of interest had to be excluded .....

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..... He argued that the case law relied upon by the assessee was not relevant and relied upon the Tribunal's order, Cochin Bench, in the case of M/s. Tara Agencies, Cochin. The assessee's representative replied that the aforesaid decision of the Tribunal had not considered the submissions regarding the risk element and the real income which have been made this time. He also relied upon the decision of the Kerala High Court in the case of Popular Kuries Ltd. v. CIT [1986] 159 ITR 519. 7. As stated above, the question before us in regarding the real nature and character of this claim of deduction. Is it interest simpliciter or is it an amount which covers any risk ? There is no doubt that if there is a risk it is from the starting point of the t .....

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