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TMI Blog2016 (12) TMI 1771X X X X Extracts X X X X X X X X Extracts X X X X ..... income by the assessee during the pendency of suit in Bombay City Civil Court. As examined the interpretation of the said section and the relevant explanation is already incorporated in the above paras of this order. We have considered the cited judgment of the Hon‟ble jurisdictional High Court in the case of Maharashtra State Financial Corporation Ltd [ 2005 (7) TMI 80 - BOMBAY HIGH COURT] . Also considered the reasoning given by the CIT (A) in paras 4.1.4 and 4.1.5 of his order. Considering the above, we are of the opinion, the conclusion drawn by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, relevant grounds raised by the Revenue in all the four appeals are dismissed. Disallowance u/s 14A - as per CIT- A disallowance need to be limited to the dividend i.e. exempted income - HELD THAT:- CIT (A) discussed the issue at length and decided the issue. Therefore, in our view, the order of the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, relevant ground raised by the Revenue dismissed. - C.O. No.25 To 31/M/2015 (Arising out of I.T.A. No.7392 To 7398/M/2013 (Assessment Year: 2001-2002 To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue in its appeal for the AY 2004-05 are extracted as under:- 1. On the facts and in the circumstances of the case and in law, the Ld CIT (a) erred in deleting the addition on account of interest of ₹ 29,65,423/- accrued on outstanding debt, without appreciating that the assessee acquired the right of suit as per assignment deed and was entitled to recover the debt along with interest and cost of suit as per the deed of assignment of right. 2. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition on account of interest of ₹ 29,65,423/- accrued on outstanding debt, without appreciating that interest on debt which was receivable by Bank of Baroda, was now receivable to the assessee and as the assessee is following the mercantile system of accounting the assessee was required to offer interest income on debts on accrual basis. 3. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in restricting the disallowance u/s 14A of the Act to the extent of the dividend (exempted) income, without appreciating that the provisions of section 14A of the Act provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id suit is transferred to the City Civil Court and the same is still pending. As per the said assignment deed, assessee was to receive the interest by various specified plans and the rates of interest vary from 18% to 22%. Assessee is said to have barrowed the funds for meeting the said requirement of ₹ 84,97,400/- and incurred interest expenditure. Considering the pendency of the suit and non-receipt of any interest income from the said parties / guarantors of the loan, assessee did not recognise the interest income in the books of accounts for all the years under consideration. It is the contention of the assessee that the interest will be accrued only by virtue of decree from the said suit and as and when it is finalized. The assessee will recognise the interest income according to the said decree applying the rates decided in the decree. Pending finalization of the suit in view of the provisions of section 34 of the CPC, the interest will not be recognized in these AYs. AO did not appreciate the same and proceed to recognise the interest income and taxed the same in all the AYs under consideration. The details of interest income so recognised are given in the orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 227 are extracted as under:- Considering section 34 of the Code of Civil Procedure, the Allahabad High Court held in CIT vs. Uttar Pradesh Financial Corporation [1992] 194 ITR282 that the Tribunal was right in holding that during the relevant previous year, interest did not accrue because during the whole of this period suits filed for recovery of the loans wre pending and the awarding of interst for the period was within the discretion of the court which was yet to pronounce its judgment. In this case, the assessee was a financial corporation. It was held that interest cannot be held to have accrued during the penalty of the suit and, as such, was not includible in the total income. The aforesaid decision was followed by the Allahabad High Court in CIT vs. U.P. Financial corporation [1996 217 ITR 191. The Orissa High Court also took the same view in CIT vs. Orissa State Financial Corporation [1993] 201 ITR 595 and held that interest did not accrue during the whole of the period during which suits were filed for the recovery of loans and awarding of interest for the period was within the discretion of the court. It was thus held that the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest income by the assessee during the pendency of suit (No. 105 of 1986) in Bombay City Civil Court. In this regard, we have perused the provisions of the said section 34 of the CPC and the same reads as under:- 34. Interest:- (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, [ with further interest at such rate not exceeding six per cent per annum, as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the court thinks fit. [Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,091/- and therefore the same is upheld to that extent. In AY 2010-2011, the AO has computed the disallowance in accordance with Rule 8D and the quantum so worked out is less than the dividend and therefore, the amount so disallowed by the AO ie ₹ 16,057/- gets confirmed.... 14. Considering the above, we are of the opinion, CIT (A) discussed the issue at length and decided the issue. Therefore, in our view, the order of the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, relevant ground raised by the Revenue in all the four appeals is dismissed. 15. In the result, all the four appeals (ie ITA Nos.7395, 7396, 7397 and 7398/M/2013) filed by the Revenue are dismissed. 16. Now, we shall take up the four Cross Objections (ie C.O.Nos. 28, 29, 30 and 31/M/2015) filed by the assessee. Considering our decision on the four main appeals of the Revenue, wherein the Revenue‟s appeals are dismissed, in our opinion the adjudication of these cross objections becomes academic. Accordingly, the four cross objections filed by the assessee are dismissed as academic. 17. In the result, four cross objections rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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