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Issues:
1. Whether there was an agreement to charge interest from a specific date onwards? 2. Whether interest accrued to the assessee after a particular date? Detailed Analysis: The judgment delivered by the High Court of Allahabad pertains to an income tax matter involving a public limited company for the assessment years 1965-66 and 1966-67. The primary issue revolved around the existence of an agreement between the assessee and a partnership firm regarding the charging of interest. The Revenue contended that interest should be charged despite no such interest being shown in the account books of the assessee for the relevant period. The Income-tax Officer and the Appellate Assistant Commissioner upheld the addition of interest to the assessee's income. However, the Tribunal took a different stance, stating that there was no agreement between the parties to charge or pay interest during the relevant years, leading to the reference of two questions to the High Court. The crux of the matter lay in determining whether there was a valid agreement to pay interest and at what rate. The court examined the averments made by the assessee in a suit filed in the Calcutta High Court, where the plaintiff claimed a specific amount with interest at 6% per annum. The suit amount was calculated based on the balance due as of March 31, 1966, and interest accrued thereafter at the agreed rate. The plaint explicitly mentioned the claim for interest at the agreed rate of 6% per annum post-March 13, 1964, indicating the existence of an agreement to pay interest. The court emphasized that the plaint's averments were crucial in determining the existence of an agreement to charge interest. It highlighted that the plaintiff's own statements in the suit provided clear evidence of the agreement at the specified rate. The court concluded that the Tribunal had misinterpreted the plaint's averments, leading to a baseless finding. Consequently, the court answered both questions in the negative, favoring the Revenue and ruling against the assessee. The judgment underscored the importance of documentary evidence, such as the plaintiff's statements in the suit, in establishing the terms of an agreement regarding interest payments.
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