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TMI Blog2018 (1) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer on the ground that C.I.T.(A) had not taken note of the subsidiary having had filed the suit and obtained a decree, which though stayed was so on condition of furnishing bank guarantee. However, in doing so, the Tribunal had not referred to the reasoning of the Assessing Officer. Since the suit having been filed and decree obtained being the basis of the Tribunal’s reasoning is no longer in existence, the decree having been set aside, we find that the assessee had by Board resolution adopted, prior to the previous year to the assessment year in the reference, decided to waive interest on the loan. That position having been restored it cannot be said there was accrual of interest income in the assessment year. We therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, whether any interest income accrued to it, in the light of the proceedings initiated by Method against the Bank is legal and proper ? The relevant facts are that in the previous year to assessment year 1986-87, the assessee advanced loan to its subsidiary company being Method Trading Investment Company Limited. The loan was made upon interest to be paid. The subsidiary company in its turn advanced a sum of ₹ 23,84,375/- to Shree Ambica Jute Mills Limited against three hundis for aggregate sum of ₹ 25 lakhs payable on 1st August, 1983. As on 30th June 1985, the outstanding in this loan account of the assessee was ₹ 20,34,375/-. Except the aggregate amount of ₹ 3,50,000/-, the subsidiary company was not able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal steps if necessary can be taken in respect of the full loan amount along with interest remaining unpaid. Hence the assessee s contention that no interest accrued to it is not accepted as the company maintains its accounts on mercantile basis in respect of interest received from other amount advanced to other subsidiary also. From the note attached at page 52 of the printed Balance Sheet for last year i.e. ending on 31.3.84 for Method Trading Investment Ltd. appearing in the printed A/cs of the holding company for last year. It was such that provision for interest payable to the holding company amounting to ₹ 3,09,021/- has not been made in the accounts. Hence for this year the amount of interest demand to have been accrued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered on these facts and by this time it is most likely that final judgment has already been rendered by the Division Bench of the Hon ble Calcutta High Court. The Hon ble Trial Judge of the High Court appears to have stipulated interest which is payable on the amount and that realisation appears to have been stayed by the Hon ble Division Bench on the furnishing of a bank guarantee by the Punjab National Bank. In such a case, the rights and liabilities of the parties have to be determined on the basis of these decisions which escaped the attention of the Assessing Officer, the C.I.T (A) and the Tribunal in the earlier assessment years. The facts taken into consideration by the Board of Directors when it decided to waive interest from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the impugned order, the Tribunal restored the matter of interest to the Assessing Officer on the ground that C.I.T.(A) had not taken note of the subsidiary having had filed the suit and obtained a decree, which though stayed was so on condition of furnishing bank guarantee. However, in doing so, the Tribunal had not referred to the reasoning of the Assessing Officer. Since the suit having been filed and decree obtained being the basis of the Tribunal s reasoning is no longer in existence, the decree having been set aside, we find that the assessee had by Board resolution adopted, prior to the previous year to the assessment year in the reference, decided to waive interest on the loan. That position having been restored it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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