TMI Blog1978 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... dited the account of the assessee with the aforesaid amount of interest. On February 2, 1968, the debtor-company addressed a letter to the assessee stating that the company was undergoing great difficulty and was not in a position to pay the interest. It requested the assessee to forgo the interest charges for that year. On February 8, 1968, the assessee replied : " We appreciate your difficulty in payment of interest for the year ending January 31, 1968, in view of the continued losses suffered by your firm and considering our old relations we agree to forgo the interest amounting to Rs. 18,191.22 for the year ending January 31, 1968. Please note that it will not be possible to accommodate you in future." On receiving this reply, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest. The Tribunal repelled the submission that if the assessee-firm had not forgone the claim of interest, its principal amount of Rs. 2 lakhs would have been in jeopardy, as a farfetched argument. Ultimately, it was held that the claim for interest was not forgone by way of commercial expediency but as a matter of grace only. The appeal was dismissed. At the instance of the assessee, the Tribunal has referred the following questions of law for the opinion of this court : " (1) Whether, on the facts and in the circumstances of the case, the interest income of Rs. 18,191 on the loan advanced by the assessee to Messrs. Kapoor Hosiery Factory (Private) Ltd. about twenty years back, accrued to the assessee during the previous year? 2. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,000,......" Here, the finding is that there was no ground of commercial expediency. Secondly, the agreement to forgo was not made at the time of ascertainment of the quantum of interest. This case is clearly inapplicable. The next case relied upon was CIT v. Shoorji Vallabhdas Co. [1962] 46 ITR 144 (SC). This case is equally irrelevant. In that case the agreement in question under which the rate of commission was reduced, took place in the year of account. The transaction was genuine and it reduced the income receivable by the assessee. On facts, the Tribunal has, in our case, found that the whole case was an after-thought because the interest had already accrued. In CIT v. Birla Gwalior (P.) Ltd. [1973] 89 ITR 266 (SC), the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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