1981 (7) TMI 10 - HC - Income Tax

Summary

Issues Involved:
1. Accrual of right to receive further interest.
2. Assessment of interest pending the result of a suit.
3. Tribunal's decision to remand the matter back to the Appellate Assistant Commissioner.

Summary:

Issue 1: Accrual of Right to Receive Further Interest
The Tribunal held that "the right to receive further interest from the date of the suit accrues to the assessee only when the court passes decree." The court agreed, noting that under s. 34 of the CPC, the awarding of further interest from the date of the suit to the date of the decree is at the discretion of the court. The right to receive such interest accrues only when the court passes the decree.

Issue 2: Assessment of Interest Pending the Result of a Suit
The Tribunal concluded that "the matter of assessment of interest cannot be decided unless the result of the suit already filed is known." The court upheld this view, emphasizing that income must accrue in accordance with the law, and in this case, the interest for the post-institution period is subject to the court's discretion under s. 34 of the CPC.

Issue 3: Tribunal's Decision to Remand the Matter Back to the Appellate Assistant Commissioner
The Tribunal sent the matter back to the AAC to decide the issue afresh after the result of the suit is known. The court found this direction appropriate, stating that the Tribunal did not decide the question in a vacuum but considered the facts of the years in question and noted that the suit had not yet been decided.

Conclusion:
The court answered all three questions in the affirmative and in favor of the assessee, agreeing with the Tribunal's findings and directions. The parties were directed to bear their own costs.