Commissioner of Income Tax vs Industrial Credit and Investment Corporation of India Ltd.

Sujata V. Manohar, J.—The assessee carries on the business, inter alia, of development financing. It gives a number of development loans to institutions which may be sick. Since 1974-75, it has adopted the cash system of accounting for interest on sticky loans and advances. The Tribunal has found, on examination of facts, that the deletion of interest accrued on loans, treated as doubtful loans was justified. In a rectification application which was filed by the Revenue before the Tribunal in respect of this very assessment year, the Tribunal has recorded that the assessee has in fact stopped crediting interest to the suspense account since 1979-80. Therefore, the Revenue''s statement that the interest which has been deleted has been credited to the suspense account is found to be incorrect. In view thereof, the Supreme Court decision in the case of State Bank of Travancore Vs. Commissioner of Income Tax, Kerala, is not attracted. The Tribunal, therefore, has rightly held that no referable question of law arises.

Regarding question No. 2 also, the findings of the Tribunal are based on a detailed examination of facts. The Revenue''s application u/s 256(2) of the Income Tax Act for the assessment year 1977-78 in respect of question No. 2 has been rejected by our High Court. This question also does not deal with any referable point of law.

Hence, the application is rejected and the rule is discharged.