9911796707
TMI Blog1983 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... of 12 per cent per annum in 1972. In addition, the partnership firm advanced security in the shape of 27,896 shares with the face value of Rs. 27,89,600 of Modella Textile Industries. These shares were fully paid up equity shares. According to the agreement, the partnership placed these shares in the custody and possession of the creditor and was agreeable to have its name entered as shareholder in the shareholder's register. It is not in respect of this loan agreement or the repayment of the principal or interest that the controversy between the revenue and the assessee had arisen. It was, in this account, that the ITO noticed that on 1st April, 1976, there was a credit balance amounting to Rs. 1,29,240 in favour of the assessee-trust, alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had gained, but it was the trust which was the gainer. The ITO was, however, not persuaded by this plea of the assessee and he held that the assessee trust was not liable to get exemption on its income for the year in issue. 3. The assessee took this matter in appeal before the CIT(A) and restated his plea. He further submitted that an understanding had been reached between the assessee-trust and the partnership firm not to charge interest during this year and it was, on this basis, neither interest was claimed by the assessee-trust on its credit balance nor the partnership firm, M/s Amarsons claimed any interest on its credit balance, appearing in the account. The CIT(A) did not accept this plea on the ground that while there was a clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the period 1st April, 1976 to 31st March, 1977 by either party in respect of their advances made to each other and it was in view of this understanding or agreement that neither party charged any interest, which, ultimately worked adversely to the interest of the partnership firm. Therefore, it was not correct on the part of the lower authorities to hold that the assessee had allowed his funds to be used by a person, referred to in s. 13(3) of the Act without any adequate consideration. It was further submitted there was more than what on facts and in law was due to the assessee-trust. The assessee trust forewent the interest for the period 1st April, 1976 to 17th June, 1976 in lieu of interest foregone by M/s Amarsons on its outst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by 31st March, 1976 when the amount advanced to the trust had been already paid. The balance of Rs. 1,29,240 from M/s Amarsons on 1st April, 1976 was not on account of capital sum advanced to it by the assessee-trust but represented interest which had accrued to the trust and which the partnership firm M/s Amarsons had to liquidate. It is this interest which had remained unpaid from 1st April, 1976 to 17th April, 1976 without payment of any interest. As there was no agreement for charging interest by the assessee-trust on such a balance, the assessee-trust did not charge any interest. Although we did not allow the assessee to produce the affidavit before us, in support of his claim that an agreement or understanding had been reached betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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