9911796707
TMI Blog2014 (8) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at 18% p.a. from the date of advance - HELD THAT:- As in assessee s own group of cases for the A.Y. 2010-2011 unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees. However, if the assessees had advanced interest bearing funds as interest free advances, the interest paid by the assessees towards such borrowed funds would have to be disallowed and treated as the income of the respective assessees. The Hon ble Punjab and Haryana High Court in the case of Abhishek Industries [ 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] has held that the nexus between the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of these assessees. 2.1. Briefly stated, the facts of the case are that the assessee companies are among the 37 companies under the control of Mr. B. Ramalinga Raju and his family members and had transactions with M/s. Satyam Computer Services Limited (in short SCSL ). Mr. Ramalinga Raju lifted the veil of secrecy and on 07.01.2009 made a confessional statement in which he addressed various authorities like SEBI and Stock Exchanges. In this statement, a key item was regarding the balance sheet of the company as on 30.09.2008 having an understated liability of ₹ 1230 crores on account of the funds arranged by him. It was stated that this amount of ₹ 1230 crores was arranged to M/s. SCSL (not reflected in the books) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,274 6. M/s. Koel Agro Farms P. Ltd., Hyderabad 3,15,08,181 7. M/s. Ahar Greenfields Farms P. Ltd., Hyderabad 3,23,69,109 8. M/s. Saravati Greenlands P. Ltd., Hyderabad 3,16,01,464 3. On appeal, the Ld. CIT(A) after detailed consideration of the submissions of the assessee held that one cannot conclude that interest income has definitely accrued and arisen to the assessee at the rate of 18% as held by the A.O. He further held that as and when the Court finalises the suit, the interest rate mentioned there in can be reckoned and income can be taxed in the year in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed for recovery of advances, it cannot be said that the said rate of interest is applicable as M/s. SCSL has not admitted the liability of even the amounts of advance. As such, we find that there is no certainty with regard to the said rate of interest. Therefore, it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances. The Civil Courts would consider and decide the liability of M/s. SCSL to repay the amounts of advances and would also consider the liability of M/s. SCSL to pay interest thereon and the rate of interest at which the advances should be repaid. Therefore, unless and until the liability to pay the advances and the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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