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Issues involved:
The judgment involves the cancellation of an order under section 263 of the Income-tax Act, treatment of interest accrued on difficult-to-realize debts, and the classification of a payment as advance tax under section 209A(1)(a) of the Act. Cancellation of Order u/s 263: The Commissioner proposed to revise the Income-tax Officer's order under section 263, citing failure to include interest income and allowing excess interest. The Tribunal found that the Income-tax Officer had proper enquiry as the earlier order excluding interest on doubtful debts was available to him. The Tribunal emphasized that non-acceptance of its order by the Department did not justify ignoring it. The Revenue contended that non-disclosure of the Tribunal's order showed non-application of mind, but the assessee argued that the authorities had considered the Tribunal's order and were bound by it. Treatment of Interest on Debts: The Commissioner held that interest income on doubtful debts, credited to the suspense account, was assessable income. However, the Tribunal, based on a previous order, excluded interest on doubtful debts from total income computation. The High Court agreed with the Tribunal, stating that the pendency of reference applications did not justify treating the income as taxable. Classification of Payment as Advance Tax: Regarding the payment made by the assessee, the Tribunal found it proper to classify it as advance tax under section 214. The Tribunal noted that the Department had treated the payment as advance tax for calculating tax payable on regular assessment. The High Court concurred with the Tribunal's view, citing a Bombay High Court decision to support the classification of the payment as advance tax. In conclusion, the High Court upheld the Tribunal's decision to cancel the order under section 263, ruling in favor of the assessee. As a result, the other questions raised did not require answers, and the reference application was disposed of without costs.
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