TMI Blog2015 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on ground of no liability in its respect accruing or arising. The special court holds the sum/s payable by A to B as being liable to be adjusted against the liability of B, or of A, or even of C for that matter, in-as-much as A, B, C (and others) form one group, so that these can be utilized for discharge of their liabilities to third parties. In other words, A is equally liable for the liability of B, and so on. The liabilities, accordingly, only represent inter se balances held in account, not leading to any substantive right or liability per se. Where, we wonder, then, is the question of interest arising on such inter-personal balances? We have in fact already observed, and which is in keeping with the observations made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 57(iii). The background facts of the case stand listed at para 2 of the impugned order, which also delineates the respective cases of both the sides. The ld. CIT(A) disallowed interest on the ground that the matter being subjudice, the liability qua the same cannot be said to be an ascertained liability. The deductibility of interest was, accordingly, linked by him to the decision of the Special Court hearing the matter, i.e., to the outcome of the decision in the case before it (in MP No. 41 of 1999). The tribunal s discussion in the matter is at para 3.1 to para 3.3 of its order; it deciding the same thus (para 3.3, page 5): 3.3 In the facts of the instant case, a part of the money .. In this view of the matter, the ld. CIT(A) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, the impugned observations by the tribunal do not, in any manner, disturb or percolates its finding or decision, which is in conformity with the Revenue s stand of the liability being unascertained, so that no right has arisen in favour of the creditor. This is also precisely the Revenue s case as projected during hearing as well, with the tribunal describing the liability as inchoate (refer para 2). What all the tribunal has done is to confirm the deductibility of interest subject to the validation by the special court before whom it was subjudice. The assessee has now informed the tribunal, vide para 7 of its Application, that the issue of interest has not been decided by the special court inas- much as it has become redundant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds to hold the issue of accrual of interest as disputed and, therefore, uncertain. The matter being subjudice, he, however, considers it fit and appropriate under the circumstances to harmonize and bring about a parity between the civil rights proceedings and the proceedings under the Act, so that the decision of the Special Court shall obtain for the purpose of tax proceedings as well, and in case it is held that the assessee is liable for interest, it shall be allowed a deduction qua the said liability. It is this decision by the ld. CIT(A) which stands upheld by the tribunal. His earlier observation regarding interest gets in fact subsumed by his later observation, and is thus rendered of no moment. The said observation by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the order by the Special Court, placing on the six pages thereof on the file (PB pgs.30-35), as noted by the tribunal at para 3.3 of the impugned order. Nevertheless, in our view, a prejudice stand caused to the assessee. True, the assessee is responsible in-as-much as it did not furnish the full facts at the first and the second appellate stage, even as the decision by the Special Court was available at the relevant time. However, we consider the tribunal to be equal, if not more, responsible for the same. It, instead of assuming that the unfurnished part of the order by the Special Court would contain its decision qua interest, ought to have clarified that aspect through enquiry during hearing, being the final fact finding authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by A to B as being liable to be adjusted against the liability of B, or of A, or even of C for that matter, in-as-much as A, B, C (and others) form one group, so that these can be utilized for discharge of their liabilities to third parties. In other words, A is equally liable for the liability of B, and so on. The liabilities, accordingly, only represent inter se balances held in account, not leading to any substantive right or liability per se . Where, we wonder, then, is the question of interest arising on such inter-personal balances ? We have in fact already observed, and which is in keeping with the observations made in the impugned order, of there being nothing on record to show of accrual of any liability qua interest, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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