9911796707
TMI Blog2008 (4) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent years by accepting the cash system of accounting adopted by the assessee and for which no appeal was pending, as claimed by the assessee, could be assessed on accrual basis in the year relevant to the assessment year 1982-83 and that it was for the assessee to seek whatever remedy was available to it in those years? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that in cases where suits had been filed and recovery proceedings initiated in courts of law, interest awarded by the courts shall relate back to the assessment year 1982-83 and not to the year in which the decision of the court is pronounced?" 2. The assessee is a financial corporation set up under the State Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) who confirmed the addition as ordered by the Assessing Officer. The assessee went before the Tribunal which also rejected the claim of the assessee. 5. We have heard learned counsel for the parties. Reliance on behalf of the assessee is placed on the judgment of the apex court in UCO Bank v. CIT [1999] 237 ITR 889. In that case, a similar question arose and the assessee had credited the interest, recovery whereof was doubtful, to the suspense account and had not included the interest while computing the total income. 6. It is apparent that the assessee-corporation is following a mixed method of accounting which method has been approved by the apex court in the aforesaid judgment. The apex court held in the following terms (page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible in the taxable income." 9. Thereafter, on October 9, 1984, the Central Board of Direct Taxes issued another circular which reads as follows: "Interest in respect of doubtful debts credited to suspense account by the banking companies will be subjected to tax but interest charged in an account where there has been no recovery for three consecutive accounting years will not be subjected to tax in the fourth year and onwards." 10. It is not disputed that the circular dated October 9, 1984, is applicable from the assessment year 1979-80 and would be applicable to the present case also. The apex court has clearly held that these circulars are binding on the authorities. The apex court considered whether the interest amount on sticky loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds the claim for interest has to be treated as a doubtful claim which need not be included in the income of the assessee until it is actually recovered." 11. It is apparent that none of the, authorities in this case have taken into consideration the circular dated October 9, 1984. A bare perusal of this circular clearly shows that the assessee can take benefit only in respect of the interest payable on those loans where no recovery has taken place for three consecutive accounting years and it is only from the fourth year onwards that the interest accrued is not to be considered as income. We are, therefore, of the opinion that the Assessing Officer should have taken into consideration the circular dated October 9, 1984, and decided the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
