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2014 (6) TMI 499 - ITAT HYDERABADAccrual of interest - Chargeability of interest – uncertainty - Money given as advance - dispute between parties – Held that:- The assessees have advanced the loans/temporary advances to M/s. SCSL - the assessees have advanced the loans or temporary advances through banking channels and immediately after the statement of Sri Ramalinga Raju, the assessees have also issued legal notices for the repayment of the loans and also filed civil suits for recovery of the loan amounts along with interest in the City Civil Court, Secunderabad – Relying upon CIT V/s. Walchand & Co. P. Ltd. [1967 (3) TMI 2 - SUPREME Court] - the assessees have stated before the CIT(A) that the amounts advanced are from out of the share application monies and temporary advances - It is so stated on the basis of entries in the Balance Sheet and the Profit & Loss Accounts of the respective assessees filed along with their returns of income. There is no certainty with regard to the said rate of interest - it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances - unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees - if the assessees had advanced interest bearing funds as interest free advances, the interest paid by the assessees towards such borrowed funds would have to be disallowed and treated as the income of the respective assessees – the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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