1995 (8) TMI 37

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..... ion of this court : " 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the interest due on the interest bearing loans did not accrue or arise to the assessee during the accounting year because the suits were pending for the recovery of the loans ? 2. Whether, the Tribunal was justified in putting off the facts of accrual of the interest in spite of the fact that the assessee followed the mercantile system of accounting and the loans were interest bearing ? 3. Whether, on the facts and in the circumstances of the case the Appellate Tribunal was justified in holding that the amount of Rs. 42,942 as interest accrued was not includible in the total income of the assessee in t .....

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..... ws : " 36. Other deductions.-- (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-- . . . (viii) in respect of any special reserve created by a financial corporation which is engaged in providing long-term finance for industrial development in India, an amount not exceeding -- (a) in the case of a financial corporation whose paid-up share capital does not exceed three crores of rupees, twenty-five per cent., (b) in the case of any other financial corporation, ten per cent. of the total income (computed before making any deduction under Chapter VI-A) carried to such reserve account." The Assessing Officer took the view .....

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..... has to be granted with reference to the total income as it stood before the deduction allowable under section 36(1)(viii). The contention that the deduction has to be restricted with reference to the net total income as defined in section 2(45) of the Act has not been accepted in any of the cases referred to above. Section 36(1)(viii) itself created an exception in this regard by providing that the total income with reference to which deduction is to be computed is the total income computed before making any deduction under Chapter VI-A. Later, by an amendment by the Finance Act, 1985, it was clarified that the total income on which deduction is to be computed is the total income computed before making any deduction under this clause and C .....

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