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TMI Blog1969 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... f the decree a sum of Rs. 62,000 was realised in 1956. The assessee adjusted that amount towards the principal amount oustanding under the decree. During the previous year, relevant to the assessment year, a further sum of Rs. 89,687 was received by the assessee. This amount was also credited by the assessee towards the principal amount outstanding under the decree. This position was not accepted by the Income-tax Officer. He held that the sum of Rs. 89,687 ought to have been credited towards interest due under the decree. The assessee appealed, and succeeded before the Appellate Assistant Commissioner. He deleted the amount of Rs. 89,687. This view was upheld in further appeal by the Appellate Tribunal. In an application under subsection ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received without a definite appropriation on the part either of the payer or the payee. In re Gopiram Govindram, it was observed by the Calcutta High Court on, page 163 : " Where interest is outstanding on a principal sum due and the creditor receives an open payment from the debtor without any appropriation of the payment as between capital and interest by either debtor or creditor, the presumption is that the payment is attributable in the first instance, towards the outstanding interest." In Chaganlal Shrilal v. Gopilal Choturam , it was held that sections 59 and 60 of the Contract Act provide that the debtor has, at the time of making payment, a right to intimate that the payment is to be applied towards the liquidation of a particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. None of these authorities lays down that when open payment is made by a debtor, the creditor is not at liberty to credit the payment towards the principal, but is under an obligation to credit the payment towards interest. Section 60 of the Contract Act states: " Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due, and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits." It is true that section 60 of the Contract Act makes no specific reference to interest due. But, as explained by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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