Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Kusum Products Limited Versus C.I.T. Central-I Calcutta

2018 (1) TMI 542 - CALCUTTA HIGH COURT

Accrual of income - interest accrued to the assessee in respect of the loan given to Method - Whether the finding of the Tribunal that the claim of the assessee that no income accrued to it in respect of the loan given to ‘Method’ could not be allowed on the basis of resolution of its Board of Directors on the ground of the subsequent fact of passing of decree by the Hon’ble High Court against the Bank and the appeal filed therefrom is vitiated by reason of inter alia of consideration of irrelev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eing the basis of the Tribunal’s reasoning is no longer in existence, the decree having been set aside, we find that the assessee had by Board resolution adopted, prior to the previous year to the assessment year in the reference, decided to waive interest on the loan. That position having been restored it cannot be said there was accrual of interest income in the assessment year. We therefore answer the questions in this reference as follows: - a) Question no.1 in favour of the assessee in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t in order dated 15th December, 1997 a statement of case was drawn up and referred by the Tribunal. The questions in the reference are as follows:- 1. Whether, the finding of the Tribunal that the claim of the assessee that no income accrued to it in respect of the loan given to Method could not be allowed on the basis of resolution of its Board of Directors on the ground of the subsequent fact of passing of decree by the Hon ble High Court against the Bank and the appeal filed therefrom is viti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

elevant facts are that in the previous year to assessment year 1986-87, the assessee advanced loan to its subsidiary company being Method Trading & Investment Company Limited. The loan was made upon interest to be paid. The subsidiary company in its turn advanced a sum of ₹ 23,84,375/- to Shree Ambica Jute Mills Limited against three hundis for aggregate sum of ₹ 25 lakhs payable on 1st August, 1983. As on 30th June 1985, the outstanding in this loan account of the assessee was & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ect from 1st July, 1983. The Assessing Officer did not accept this contention of the assessee and assessed deemed interest on accrual basis amounting to ₹ 3,09,221/- in the assessment year under reference. The reasons given by the Assessing Officer appears from the following passage of the assessment order dated 28th February, 1989, extracted below. …….But this contention of the assessee company cannot be accepted as the company took a very quick decision in not charging any .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r it is also general business practice to adjust interest first from any amount recovered from a debtor so that legal steps if necessary can be taken in respect of the full loan amount along with interest remaining unpaid. Hence the assessee s contention that no interest accrued to it is not accepted as the company maintains its accounts on mercantile basis in respect of interest received from other amount advanced to other subsidiary also. From the note attached at page 52 of the printed Balanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mpany for this year. CIT(A), on appeal preferred by the assessee, deleted the addition agreeing that it had the right to waive interest receivable on any particular loan by taking into consideration the circumstances of the loan. Revenue carried the matter to the Tribunal, which took note of the fact of a suit having been filed in this Court by the subsidiary company where there was a decree made on 20th September, 1988 against Punjab National Bank, inter alia, for payment of the entire balance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of the effect of the judgement passed by the Hon ble Trial Judge of the Calcutta High Court in Suit no. 290 of 1986. It appears that the order was stayed operation on the furnishing a bank guarantee by the said Punjab National Bank from another Nationalised Bank. In such a case, the question whether the non-charging of interest is justified has to be considered on these facts and by this time it is most likely that final judgment has already been rendered by the Division Bench of the Hon ble C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ars. The facts taken into consideration by the Board of Directors when it decided to waive interest from the subsidiary company M/s. Method Trading & Investments Ltd. appear to be totally changed or eliminated by the order of the Trial Judge in Suit no. 290 of 1986. The operation of the order is stayed only on the furnishing of the bank guarantee by the Co-acceptor, M/s. Punjab National Bank. The whole complex is, therefore, changed and claim can no more be allowed on the basis of the resolu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version