TMI Blog1982 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... 1969-70, and accrued only during the previous year relevant to the year under consideration ? 2. Whether, on the facts and in the circumstances of the case, and having regard to the fact that the assessee was following mercantile method of accounting, the Tribunal was correct in holding that the interest of Rs. 16,080 which was due in respect of the assessment year 1969-70, could be allowed as a deduction for the assessment year 1970-71 ? " This reference relates to the assessment year 1970-71, the corresponding previous year being the year ended 30th April, 1969. The assessee is a company. The ITO had disallowed interest for a sum of Rs. 16,080 on the ground that the expenditure was not pertaining to the relevant previous year. Being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary entries were made in the accounts. After considering the rival contentions, the Tribunal held as follows : " 5. We have given our careful consideration to the rival submissions with reference to the documents placed before us on behalf of the assessee-company. Two bills bearing No. 9282 dated 30th April, 1967, for Rs. 3,760.98 and No. 9400 dated 30th September, 1967, for Rs. 12,318.97 were re-presented before the assessee-company by the creditor-company along with the letter dated 27th December, 1968, which fell within the previous year relevant to the instant assessment year under appeal before us. The assessee represented to the creditor-company by its letter dated 29th September, 1967, for waiving the claim for interest, as it had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed in the assessment for the assessment year 1958-59 and the same was allowed. Therefore, we are of the opinion that in the instant case before us the Appellate Assistant Commissioner, was right in his decision. " Upon this an application was made for a reference to this court which was rejected under s. 256(1) of the I.T. Act, 1961. Thereupon, an application was moved before this court and, as directed by this court, the Tribunal has referred to us the questions as indicated hereinbefore. The following facts are important to bear in mind : (1) Negotiations for settlement or waiver of interest had started before the end of the relevant-previous year, (2) no bills were actually received prior to the relevant previous year, (3) the a as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply. If before the end of the previous year, negotiations had been entered into for giving up any amount, then there was stoppage of accrual of debt due in the previous year. In that view of the matter, we are of the opinion that the Tribunal has arrived at a correct conclusion. In the premises, question No.1 is answered in the negative and in favour of the assessee. So far as question No. 2 is concerned, it is slightly misleading, because the Tribunal held that the, interest of Rs. 16,080 did not become due until the assessment year 1970-71. Therefore, we must answer the question by saying that the Tribunal was correct in holding that the interest of Rs. 16,080 became due during the assessment year 1970-71 and, as such, was allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
