Commissioner of Income Tax vs K.P. Nelson

S. Sankarasubban, J.—This reference is at the instance of the Revenue and two questions of law arise in this case, which are as follows :

"1 Whether, on the facts and in the circumstances of the case and also in view of the fact noted in the enclosure to the reference application that the refund as per order dt. 27th Feb., 1985, was issued only on 4th Nov.. 1985, the learned Tribunal is right in law and fact in holding that the interest in a sum of Rs. 40,495 which was granted by the order dt. 27th Feb., 1985, cannot be included in the assessment for the asst. yr. 1986-87 ?

Whether, on the facts and in the circumstances of the case and also in view of the Guwahati High Court decision in N. R. SIRKER Vs. COMMISSIONER OF Income Tax, ASSAM., the learned Tribunal was right in holding that the interest income was not assessable in the asst. yr. 1986-87.

The assessment year in question is 1986-87. The assessee is the sole beneficiary of a trust by name "Nelson Trust". The assessment was made in the hands of the trust and from the asst. yr. 1982-83 onwards. For the asst. yr. 1986-87 at the instance of the AO, the sole beneficiary was assessed for the same assessment year. It was then noticed that in the assessment of the trust interest of Rs. 40,494 was granted for the asst. yr. 1982-83 and Rs. 42,997 was granted for the asst. yr. 1983-84, all u/s 214 of the IT Act. The assessment of the sole beneficiary of the trust was completed for the asst. yr. 1986-87 without including the interest granted u/s 214.

Therefore, the assessment of the assessee was reopened to include the interest granted u/s 214. Accordingly, the assessment was made by including the. years 1982-83 and 1983-84. The question arose as to which year that should be included. As for the inclusion of the sum of Rs. 42,997 granted to the trust, the Tribunal upheld its inclusion in the hands of the assessee as the refund fell during the previous year relevant to the asst. yr. 1986-87. With regard to this questions of law are raised.

While arguing the matter, we find that the Tribunal has not stated as to the method that was adopted. Hence, we refuse to decide the questions of law and remand the matter to the Tribunal for reconsideration of the matter and give a finding with regard to the year in which interest should be assessed.

IT reference is disposed of as above.