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TMI Blog2006 (10) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the CIT(A) s action in deleting the disallowance of interest of ₹ 3,60,000, when no interest was charged by the assessee-company on the advances given to its subsidiaries, namely, M/s. Dhampur Yeast Co., and M/s. U.P. Strawboards and Agro Products Ltd.? 2. The reference relates to years 1983-84 to 1986-87. 3. Briefly stated the facts, giving rise to the present reference are as follows: The facts, which are common to question No. 1 is concerned, that applies for all the assessment years and under reference is related to the rate of interest payable on the excess levy price sugar collected by the assessee. The claim of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to sub-section (5) of section 3 read as under :- Credit to the fund within sixty days from the date of such final disposal such amount to the extent it represents any excess realisation together with interest due thereon at the rate of twelve and a half per cent per annum from the date on which such amount was realised by him :- Provided that : (i) the interest due on so much of such amount as was realised before the date of commencement of the Levy Sugar Price Equalisation Fund (Amendment) Act, 1984 and is not credited to the fund together with interest at the aforesaid rate of twelve and half per cent per annum before the expiry of sixty days from the date of such commencement; and (ii) the interest due on so much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited to the fund account at the rate of 12 per cent then the 15 per cent shall not be applicable. The reading of sub-section (5A) as amended (reproduced above) goes to indicate that if the excess realisation is held by the producer as ordered by the Court, with any person, Court, Government or bank then the interest shall be limited to that amount actually accrued for such period. The reading of the order of the authorities below does not give any indication as to whether the interest on the excess sugar price realised had been credited to the fund account at the rate of 12.5 per cent. We may observe that if it had not so been credited to the fund account at the rate of 12.5 per cent then the interest on the excess sugar price realised s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est at the rate of 18 per cent was chargeable on the same. The claim of the assessee has been same as in earlier years that on account of huge losses in both the companies, no interest is being charged, cannot be accepted since the company is paying huge amount of interest on other amounts taken as loan by the company. Therefore, interest on this amount amounting to ₹ 3,60,000 is clearly disallowable and, accordingly, an addition of ₹ 3,60,000 is added in the total income on the basis of reasons given in the earlier years. The CIT(A) in this connection made the following observations :- 3. Ground No. 1(i)( b) is against the addition of ₹ 3,60,000 for interest on the amounts advanced to M/s. Dhampur Yeast Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid-up capital of the subsidiary was only of ₹ 1 lakh while the losses suffered by the said subsidiary were of ₹ 12.95 lakhs, therefore, there was very little possibility of every realising the principal amount from the subsidiary and, therefore, the company had rightly not charged any interest from the said subsidiary. 8. At the hearing before us revenue relied on Gappumal Kanhaiyalal [1979] 117 ITR 78 (All.), where interest was credited to assessee by debtor on last day of accounting year but the same was foregone at request of debtor and the relinquishment was not based on commercial expediency. High Court held that income has already accrued in the previous year in which it was credited. 9. Learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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