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TMI Blog2015 (8) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... mulated above is answered in the negative and in favour of the revenue - ITA 52 of 2002 - - - Dated:- 17-7-2015 - JUSTICE GIRISH CHANDRA GUPTA AND JUSTICE ARINDAM SINHA, JJ. For The appellant : Mr. S.B.Saraf,Advocate For The Respondent : Mr. Sanjay Bhowmik,Advocate The Court : - The subject matter of challenge in the appeal is a judgment and order dated 16th April, 2001 pertaining to the assessment years 1990-91 and 1991-92. The learned Tribunal held, inter alia, as follows : When we look at the facts of the case, we find that the department has raised rather a very lame excuse in disallowing the claim of the assessee towards interest payment on the ground that the assessee did not debit the interest amounts in its acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest liability in the respective years. So far as the assessment years 1990-91 and 1991-92 are, therefore, concerned, we reverse the orders of the lower authorities and direct that the claims of interest to the Bank be allowed irrespective of the fact that the amounts in respect thereof were not actually debited to the accounts of the assessee. Mr. Saraf, learned Advocate appearing for the appellant revenue submitted that the real question to be considered in the appeal is whether the assessee can be allowed deduction on account of interest arising out of a liability which the assessee himself has disputed. He drew our attention to page 2 of the impugned order wherein the findings recorded by the Assessing Officer were noticed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be reframed as follows :- Whether the assessee can be permitted to claim deduction for interest which was neither paid nor shown to have been incurred in the books of accounts ? Mr. Bhowmik, learned Advocate appearing for the assessee drew our attention to the judgment in the case of Kedarnath Jute Mfg. Co. Ltd. versus Commissioner of Income Tax (Central), Calcutta reported in 1971(82) ITR 363 which was a judgment with respect to statutory liability on account of sales tax. A statutory liability evidently stands on a different footing than a contractual liability. The suit filed by the bank is evidently on the basis of a contractual liability. The assessee has been disputing the liability. The reasoning adopted by the learned Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution. Liability to pay and quantification are different aspects, though having a live link for the purpose of assessment of income. The method of accounting being mercantile, belated entry in the books of account and/or passing of resolution was inconsequential. This conclusion gains sustenance from the view of the Supreme Court in Kedarnath Jute Manufacturing Co. Ltd. s case [1971] 82 ITR 363, that a deduction may be allowed in respect of a statutory or other liability even if no provision is made for it in the accounts. Before completion of the assessment by filing a revised return, the assessee had indicated its liability and had claimed deduction. Merely because the resolution in question was adopted after the close of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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