Commissioner of Income Tax vs Tapas Kumar Sanyal

Sen, J.—The Tribunal has referred the following question of law to this Court u/s 256(1) of the income tax Act, 1961:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the entire amount of interest of Rs. 50,925 is not assessable during the relevant assessment year and that the interest that was accrued during the assessment year under consideration is only assessable, even if the decisions of certain High Courts are to the contrary?"

The assessment year involved is 1972-73 for which the previous year ended on 31-3-1972.

Although the facts of the case have been elaborately stated by the Tribunal in the statement of case, the point in controversy is very short. The assessee had succeeded after various proceedings to obtain interest from the Calcutta Stock Exchange at the rate of 6 per cent per annum from the date of institution of a suit in the Calcutta High Court. Interest was paid for illegal deprivation of his right.

The assessee claimed that the entire interest amount was not assessable in the assessment year 1972-73, but should have been spread over. The assessee maintained his account on the basis of mercantile system. The Commissioner (Appeals) upheld the contention of the assessee and directed the amount of interest to be spread over the various years in respect of which it was calculated to be payable.

On further appeal the Tribunal held as follows:

"We see that the Hon''ble Supreme Court by the judgment dated 25th September, 1970 held that the appellant is entitled to receive from the exchange the balance remaining due after deduction of the aggregate amount or value of the obligations. He will be entitled to interest on the balance at the rate of 6 per cent per annum from the date of institution of the suit. That being the position, even assuming that the entire amount of interest was assessable as revenue receipt, the same was assessable in the assessment year 1971-72 and not in the assessment year 1972-73. It may be noted that the High Court by its judgment dated 14th July, 1971 simply quantified the amount of interest as per direction of the Hon''ble Supreme Court."

The Tribunal further observed:

"In the instant case, there was no dispute about the fact that the sum of Rs. 50,926 represented accumulation of interest which became payable to the assessee by the decision of the Hon''ble Supreme Court at the rate of 6 per cent per annum. That being the position, it has to be held that the learned AAC was justified in his direction to assess the interest that was accrued during the assessment year under consideration, even if the decisions of certain High Courts are to the contrary."

We have already gone into this aspect of the question in the case of CIT v. Official Trustee of West Bengal for Trust, Murshidabad Estate for which the judgment was delivered today. In view of the reasons mentioned in that judgment and particularly, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax, Madras Vs. T.N.K. Govinda Raju Chetty, , the question is answered in the affirmative and in favour of the assessee.

There will be no order as to costs.

Banerjee, J.

I agree.