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TMI Blog1969 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... Pateshwari Prasad Singh, Balrampur, is the assessee. The assessment year is 1957-58. Some time in 1931, the assessee had advanced a loan of Rs. 6,00,000 to Baraon Estate. The assessee obtained a decree against Baraon Estate for a sum exceeding Rs. 6,00,000 on account of principal and interest. In execution of the decree a sum of Rs. 62,000 was realised in 1956. The assessee adjusted that amount towards the principal amount oustanding under the decree. During the previous year, relevant to the assessment year, a further sum of Rs. 89,687 was received by the assessee. This amount was also credited by the assessee towards the principal amount outstanding under the decree. This position was not accepted by the Income-tax Officer. He held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n execution. So Order 34, rule 10, Code of Civil Procedure, has no application. In Meka Venkatadri Appa Row v. Parthasarathi Appa Row, it was held by the Judicial Committee that the rule is that where a debt carries interest, payments are appropriated in the first place towards interest. In that case, money was received without a definite appropriation on the part either of the payer or the payee. In re Gopiram Govindram, it was observed by the Calcutta High Court on, page 163 : " Where interest is outstanding on a principal sum due and the creditor receives an open payment from the debtor without any appropriation of the payment as between capital and interest by either debtor or creditor, the presumption is that the payment is attri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of the return by the assessee indicating to which item of the mortgage dues the sum of Rs. 13,000 was to be appropriated. It was held that the sum of Rs. 13,000 should be first applied to the payment of costs which amounted to Rs. 1,582 and the balance of Rs. 11,418 should be applied towards the payment of interest. None of these authorities lays down that when open payment is made by a debtor, the creditor is not at liberty to credit the payment towards the principal, but is under an obligation to credit the payment towards interest. Section 60 of the Contract Act states: " Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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