9911796707
TMI Blog1986 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the previous year under consideration. He, therefore, allowed interest for one full year to the assessee amounting to Rs. 72,643 and disallowed the remaining claim namely Rs. 61,839.. On appeal, the ld. AAC has allowed the entire claim of the assessee. While doing so, he made inter alia, the following observations: "......The assessee was allotted a plot of land and interest was payable for the use of plot and since the issue of the allotment of the plot and possession and use thereof was in dispute for long time, the assessee was not sure about what interest will be payable by the assessee and when? The entire liability was crystallised and quantified by the UP State Industrial Development Corpn. Ltd. and accepted by the assessee during the year under appeal. In these circumstances, I find that the ratio of the Hon ble Madhya Pradesh High Court in the case of National Newsprint Papers Mills Ltd. vs. CIT 1977 CTR (MP) 234 : (1978) 114 ITR 172 (MP) is applicable in the case of the appellant....." The Department is aggrieved of the aforesaid order of the ld. AAC. According to the Revenue, there was no dispute between the assessee And theU.SStateIndustrial Development Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahibabad Industrial Estate in lieu of plot No. A-18, allotted to the assessee earlier on the following conditions: "(1) That the date of the original allotment letter bearing No. 1698-1701/SIDC-IA/-II-Sahibabad i.e. 23rd April, 1977 shall be treated as date of the allotment in respect of the aforesaid plot No. 16/2A Site IV and the terms and conditions contained therein shall remain in force for the same. (2) That the balance amount on reservation money shall be shortly intimated to you from our original office atGhaziabadand you shall be liable to pay within one month from the date of the intimation." 4. The agreement in respect of the allotment of the aforesaid plot was also entered into the prescribed form on 1st March, 1978 in terms of which it was stipulated vide cl. 8 that the assessee would pay the outstanding amount of provisional premium of Rs. 4,80,340 in either yearly instalments, the first instalment falling due for payment on 1st July, 1979 and every subsequent instalment to be paid on the anniversary date of the aforesaid due date of the payment of the first instalment of premium together with interest at 15 per cent on the total amount of premium outstanding fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be determined whether there is merit in the assessee s contention that the entire interest on the amounts outstanding representing the unpaid amount of premium from 23rd April, 1977 onward accrued during the previous year under consideration and whether there is any truth in the assessee s submission that there was dispute with regard to the payment of the interest and that the said dispute was resolved during the previous year only and so the amount in question became due in the previous year. 8. From the agreements entered into by the assessee with UP State Industrial Development Corp. Ltd., it is clear that the interest @ 15 per cent was agreed to be paid by the assessee on the basis of the original allotment letter dt.23rd April, 1977as soon as the said allotment was accepted by the assessee. The terms on which the allotment was made were at no stage challenged by the assessee. Instead the assessee had requested the Corpn. to change the allotment because the plot question did not suit his requirements and the said request of the assessee was also accepted by the Corp. when it made allotment of another, plot to the assessee on29th Sept., 1977. It was however, made clear i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration merely because the assessee choose to make the payment during the year under consideration or even on the ground that the Corpn. raised its demand for paying interest for the first time during the year under consideration. The liability to pay interest arises out of he contract and not out of the act of demanding interest by the Corporation. 9. During the course of arguments, the ld. counsel for the assessee had placed reliance on the following three decisions: (1) National Newsprint Papers Mills Ltd. vs. CIT. (2) Addl. CIT vs. Rattan Chand Kapur (1984) 43 CTR (Del) 283 : (1984) 149 ITR 1 (Del) (3) CIT vs. Con Finance Ltd. (1973) 89 ITR 292 (Bom). We have carefully gone through the aforesaid authorities and we notice that the facts in those cases were not identical with the facts in the present case. Thus in the case of National Newsprint, on the amounts advanced by the government to the assessee, no rate of interest had been specified and, accordingly subsequent negotiations had to be undertaken with the government regarding the chargeability of the interest and the rate of interest. Interest rate was finally fixed in 1975 and it was then that the assessee clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. It is merely pleading at our stage for the first time and a mere pleading cannot take the place of evidence. Accordingly, we reject the assessee s contention on this point. 11. So far as the decision of CIT vs. Con Finance Ltd. is concerned, the facts of the said case have no similarity with the facts of the present case and as such it is not understood as to how the assessee derives support from the aforesaid case. It is true that there are observations in the aforesaid case to the effect that "The Court would have more regard to the reality of the situation rather than the purely theoretical or doctrine are aspect of it and greater emphasis will be laid on the business aspect of the matter viewed as a whole when that can be done without disregarding the statutory language, but it is not shown by the assessee in the present case as to how the above principle is being violated in adopting the view taken by us above. The reality of the situation, according to us is that there is an agreement entered into by the assessee in accordance with which the assessee is under an obligations to pay interest at half yearly intervals, the said agreement is dt.1st March, 1978. Two half ..... X X X X Extracts X X X X X X X X Extracts X X X X
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