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TMI Blog2003 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., 1973-74, we found no infirmity in the order of the Tribunal. - - - - - Dated:- 23-7-2003 - Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT On an application under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the interest on amount advanced to M/s. Citric India Ltd., Bombay, as per the agreement letter dated July 27, 1965, had accrued to the assessee-company following the mercantile system of accounting?" The assessee-company agreed to advance a sum of Rs. 20,00,000 to M/s. Citric India Ltd. at 12 per cent, interest per annum, but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowing company has also not shown the interest liability on account of interest payable by that borrowing company to the assessee, the interest income should not be taxed on the basis of accrual in this case. He placed reliance on the decision of the Madras High Court in the case of CIT v. Motor Credit Co. Pvt. Ltd. [1981] 127 ITR 572 the decision of their Lordships in the case of Tamil Nadu Industrial Investment Corporation Ltd. v. CIT [1999] 237 ITR 889 (SC) and again the decision of their Lordships in the case of CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC). The facts are not in dispute that there was an agreement for advance of Rs. 20,00,000 loan to M/s. Citric India Ltd. at 12 per cent, interest per annum but the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the assessee made further payments subsequent to the dates originally stipulated. The Tribunal had observed that up to October 15, 1969, the amounts advanced by the assessee-company were at Rs. 23,36,280.49 against the stipulated amount of Rs. 20 lakhs. At any rate the Tribunal held there was substantial compliance of the terms of the agreement as contained in the assessee-company's letter dated July 15, 1965. In our order for the assessment years 1970-71 to 1972-73, it is also pointed out that the assessee-company had advanced loans of Rs. 18,87,723/45 up to October 21, 1970. The assessee-company has filed copies of its accounts as appearing in the books of M/s. Citric India Ltd., for the period August 4, 1965 to March 31, 1975. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not appear to tally in the books of the borrower and the lender companies. May be that the difference is on account of difference accounting methods followed by the two companies. Apparently as per copies of accounts in the books of M/s. Citric India Ltd., as filed in the paper book, there was no transaction with M/s. Citric India Ltd. after October 21, 1970, and thereafter only balance had been carried forward. If that is so there are definitely discrepancies in the account. As on April 1, 1971, the balance as per entries in the books of account M/s. Citric India Ltd., is Rs. 17,39,165.75. There is no transaction thereafter. But according to the assessee's own version the outstanding as on June 30, 1971, were at Rs. 19,01,319. Even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in the audit notes year after year that no interest has been provided and not that the interest has been waived. If the assessee-company wanted to waive the interest, it could have passed a resolution for such waiver once for all, instead of mentioning in the audit note every year that no interest was provided. In our opinion, it is not a case of waiver of interest at all. We have discussed in detail in our order dated October 30, 1980, referred to supra relating to the assessment years 1971-72 and 1972-73 that there was no waiver of interest. For the same reasons we hold that there was no waiver of interest. The interest, therefore, accrued to the assessee on the lending to M/s. Citric India Ltd., and has rightly been included in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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