Commissioner of Income Tax vs S.M.S. Investment Corporation

This application is made by the Revenue u/s 256(2) of the Income Tax Act, 1961, for a direction to the Tribunal to state a case and refer the question of law said to arise out of the Tribunal''s order which is indicated in the application.

The only real controversy is, whether the interest charged by the assessee was simple interest as claimed by the assessee and accepted by the Tribunal or it was compound interest at the same rate as claimed by the Revenue. The Revenue''s contention is based on a slip of paper containing calculation of interest at compound rate. According to learned counsel for the Revenue, the seizure of this document from the premises of the assessee raises a presumption that interest was chargeable at compound rate notwithstanding the fact that in the agreement between the parties, the interest chargeable was only simple interest. Even assuming that such a presumption arose, as claimed by the Revenue, the same was a rebuttable presumption relating to a question of fact and the Tribunal has held that the same has been duly rebutted. The question involved is, therefore, a question of fact. There is no ground to allow this application. It is accordingly rejected.