TMI Blog2005 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 12-1-2005 - Judge(s) : R. K. AGARWAL., PRAKASH KRISHNA. JUDGMENT The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law in pursuance of the direction issued by this court under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"): "Whether, in law and circumstances of the case, the Income-tax Appellate Tribunal was justified in deleting addition of Rs. 35,250 made by the Income-tax Officer on account of accrued interest?" The assessment year involved is 1981-82. The assessee is a private limited company and it has three units, one of them is Kumar Cold Storage, the income of which is generally from storage and rental. The assessee has adopted the mercantile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually accrued to the assessee on October 31, 1980, the day on which the accounting period ended. It has also come to the conclusion that no date was entered in the agreement of loan regarding payment of interest. Heard Sri A.N. Mahajan, learned standing counsel for the Revenue. None appears on behalf of the assessee. Learned standing counsel has placed strong reliance upon the judgment of the apex court in CIT v. Shiv Prakash Janak Raj and Co. P. Ltd. [1996] 222 ITR 583 and submitted that the concept of real income cannot be imported so as to defeat the provisions of the Act and the Rules. The assessee had charged interest from the debtors in the earlier years and follows the mercantile system of accounting, therefore, the interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been pointed out by the Supreme Court relevant to the assessment year 1968-69 is that the resolution not to charge interest from the borrowers was passed by the assessee-company before the end of the accounting year. While in respect of the other three assessment years the resolution, waiving interest was passed by the assessee-company after the end of the accounting years. This distinction has to be taken into consideration while deciding the controversy in hands. The apex court also explained its earlier judgment given in the case of Birla Gwalior P. Ltd. [1973] 89 ITR 266. To correctly appreciate the ratio of the Supreme Court judgment given in the case of Shiv Prakash Janak Raj and Co. Pvt. Ltd. [1996] 222 ITR 583 (SC), it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculturists or storers who stored potatoes in the cold storage of the assessee. The genuineness of the money advanced by the assessee to the storers, etc., was also not in dispute. The Tribunal has also come to the conclusion that the Department has failed to discharge the burden to prove that interest, in fact, accrued during the relevant assessment year and in the absence of any such finding it cannot be said that the interest accrued to the assessee and, as such, the inclusion of interest income were unjustified. The assessee decided not to charge the interest before the end of the accounting year relevant to the assessment year in question. In the case of Shiv Parkash Janakraj and Co. (P.) Ltd. [1978] 112 ITR 872 (P H) the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
