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TMI Blog1982 (11) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... o him simply because the firm suffered heavy losses it cannot be said that no interest has accrued to the assessee on the deposits made with the said firm. The ITO was of the view that the interest income @ 12% on the deposit of Rs. 2,97,308 amounting to Rs. 35,677 accrued to the assessee and the same was added in her hands. Consequently the assessee was completed on total income of Rs. 35,970 vide assessment order dt. 28th March, 1981. 4. The assessee took up the matter in appeal and inter alia contended that interest income did not accrue to her and as such she was not under obligation to disclose interest income in the return. The ld. AAC was of the view that similar matter was in issue before the Tribunal in the asst. yrs. 1975-76, 1976-77 1977-78. The Tribunal, after considering the evidence on record held that interest income did accrue to the assessee. The ld. AAC on the basis of the finding of the Tribunal held, that interest income did accrue to the assessee in the year of account and the ITO was right in adding interest income of Rs. 35,677 in the hands of the assessee. 5. Before the Tribunal on behalf of the appellant it was contended that the authorities below wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions of the parties and evidence on record I would like to point out that a decision is a percent on its own facts. Each case presents its own features. Reference may be made to the ratio of decision in the case of Mahendra Mills Ltd. vs. P. B. Desai, AAC Anr. (1975) 99 ITR 135(SC). In the decision in the case of CIT vs. Brij Lal Lohia Mahabir Prasad Khemka (1972) 84 ITR 273 (SC), the Supreme Court at p. 277 ruled as under: "The fact that in the earlier proceedings the Tribunal took a different view of those deeds is not a conclusive circumstance. The decision of the Tribunal reached during those proceedings does not operate as res judicata. As seen earlier there was a great deal more evidence before the Tribunal during the present proceedings, relating to those gift deeds." In this decision earlier, the Tribunal considered the gift and held that it was not a valid gift. The matter went to the High Court and the Hon ble High Court also held that the finding of the Tribunal was correct. In the subsequent year more material was produced before the Tribunal and the Tribunal after considering all the evidences held that the said gift was valid. Ultimately the matter went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. Reference may be made to the ratio of decision in the case of CIT vs. Birla Gwalior (P) Ltd. To the same effect is the ratio of decision in the case Morvi Industries Ltd. vs. CIT (Central) Calcutta. In the said decision their Lordships of the Supreme Court ruled that in such cases the real question for decision was whether the income had really accrued or not. It is not hypotherical accrual of income that has got to be taken into consideration but real accrual of the income. In the decision in the case of Sarupchand Hukamcnand Pvt. Ltd. vs. CIT their Lordships of the Madhya Pradesh High Court followed the ratio of decision in the case of Morvi Industries Ltd. The Hon ble High Court reproduced the observations made by the Supreme Court in the case of Morvi Industries Ltd. At page 297 of the report, the Hon ble High Court reproduced the observations of the Supreme Court, which reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither any account as interest was receivable nor I had in fact received any interest on this current account from the firm Ratilal Manekji of Burhanpur for S.Y. 2033 asst. yr. 1978-79." The ITO was not satisfied with the said affidavit. Consequently he recorded the statement of the assessee. Its copy is in the Paper Book at pp. 8 9. The ITO specifically put a question as to why interest was not charged by her on the deposits in question. In her reply, she stated that the firm suffered losses and as such she did not charge interest. The ITO also put a question as to what was her relation with the partners of the firm Ratilal Manekji. She replied that all the partners were her real sons. The ITO again put a question since all the partners are her relations as such she did not charge interest. The assessee replied in specific terms and stated that all the partners of the said firm are her real sons. Since the firm suffered heavy losses in earlier years also, she did not charge interest. The ITO further put a question that in the affidavit she made reference of the letter dt. 9th Nov., 1975 by which she agreed that she will not charge interest on the deposits with the firm. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners of the firm must be having all kinds of sympathy with her sons. The firm suffered heavy losses. On account of these facts and in order to help her sons, she agreed not to charge interest. In the asst. yr. 1975-76 the firm suffered loss of Rs. 1,00,000. In the subsequent years 1976-77 1977-78 the firm suffered losses of Rs. 18,57,118 and Rs. 13,26,116 respectively. Even in the assessment year under consideration the firm suffered loss. When the firm in which her sons were partners was suffering heavy losses it is quite reasonable and probable that a mother would like to give up her claim regarding interest so that her sons may be in a position to bear the losses. The story put forth by the assessee is in accordance with the hard facts of life. In the decision in the case of CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) at pp. 546-547, the Supreme Court has ruled as under: "Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ be to the reliabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in earlier years. So on the basis of evidence on record including material evidence a different conclusion can be arrived at from the conclusion arrived at in earlier years. 15. Looking to the aforesaid facts, evidence on record and preponderance of probabilities it is fully proved that in the present case in the year of account the assessee has agreed not to charge interest on the deposits in question from the firm in which the deposits were made. Such an agreement was genuine, reasonable and in accordance with preponderance of probabilities and hard facts of life. The assessee had also right to waive her right in not claiming interest in question. Thus, there was no debt credited in favour of the assessee by the said firm and as such it cannot be said that the assessee had acquired a right to receive the income or that income has accrued to her. In the present case on the evidence on record it is fully proved that interest income has not accrued to the assessee in the year of account. It is common ground that as a fact the assessee did not receive and interest income from the said firm. Thus, in the present case in the year of account, interest income has not resulted at all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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