TMI Blog2017 (2) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ssisted by Sri R. S. Agarwal, advocate, for the assessee and Sri Shubham Agarwal for the Revenue. 2. The Income-tax Appellate Tribunal, Allahabad (hereinafter referred to as Tribunal ) has preferred following two questions of law for our determination : (i) Whether on the facts and in the circumstances of the case and on a proper interpretation of agreements, letters and resolutions dated May 13, 1987, June 26, 1987, March 14, 1989, March 15, 1989 and March 17, 1989, the Tribunal was justified in law in holding that interest on loans advanced to M/s. Marigold Holdings and Trading Company Ltd, and M/s. Shivtrishul Finance Limited (now known as Dakshinanchal Finance Limited) by the assessee-company (formerly Renusagar Power Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the assessee-company therefore, it disclosed interest on lower rate for the period January 1, 1988 to March 31, 1989, i.e., in the assessment year 1989-90, at the rate of 6 per cent. per annum. Assessing Officer did not accept this reduction holding that interest accrued on monthly basis and also that the board of directors of the assessee have no power to waive accrued income retrospectively and the reduction could at the best be on a prospective basis. It assessed interest accrued for the period January 1, 1988 to February 28, 1989 at the rate of 12 per cent. per annum resulting in addition of ₹ 58,50,000 in the income. 6. In appeal preferred by the assessee, the Commissioner of Income-tax (Appeals) (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard we required learned counsel appearing for the Revenue to show any provision or authority which may justify an inference that interest shall be deemed to have accrued on daily or monthly basis. It is true that liability of interest will go on increasing with the passage of time every day, but for the purpose of accounting, interest rate is on annual basis and not daily or monthly basis. If it is shown to have accrued on monthly basis to the net interest per annum would become much more than 12 per cent. since it will take a nature of compound interest, accruing every month. There is no reason to add such burden when parties have agreed on simple interest at 12 per cent. per annum. So long as the interest has not accrued, rate thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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