Kamak Plastics Ltd. vs Commissioner of Income Tax and Another

T. Meenakumari, J.—The writ petitions are for the issue of writ of certiorarified mandamus to call for the records relating to the petitioner in

C. No. 1241-11/42 to 44 of 1988 dated November 2, 1989, passed u/s 264 of the Income Tax Act, 1961, and consequently direct the first

respondent to grant relief in respect of interest claimed for the assessment years 1981-82, 1982-83 and 1983-84.

The assessee is a company. Learned counsel for the petitioner has argued that for the assessment year 1981-82, the petitioner has filed a return

of income on October 30, 1981, and similarly for the assessment years 1982-85 and 1983-84 the petitioner filed the return of income. The

appeals were preferred u/s 144 of the Income Tax Act to set aside the assessment. Thereafter, the revisions were also filed. It has been contended

that the assessee did not claim interest taken from the bank. In the revisions filed the assessee claimed that the petitioner''s unit was a sick unit and

the bank did not charge interest and subsequently, the company started getting profits. The bank has decided to charge interest for the earlier years

also. Basing on that, the assessee calculated interest at the rate of 15 per cent, as allowable expenditure. The above request was rejected by the

respondent-Department, on the ground that it was out of time. It has also been stated that the interest can be said to be payable only when it was

debited in the assessee''s or in the bank''s books. In the revision the Commissioner has observed that ""in fact it is seen that the bank had originally

agreed to waive the interest on the loans. It is noticed from the bank''s letter dated October 11, 1989, that they had not yet debited the interest in

the loan accounts and that they wanted specific time bound programme from the assessee in this regard"". While disposing of the case, the

Commissioner did not take into consideration the above letter. He has dismissed the revisions on the ground that the petitions were out of time

without jurisdiction. A reading of the bank''s letter dated October 11, 1989, shows that they are going to debit the uncharged interest. As there is

no finding by the Commissioner on the bank''s letter, I feel it is just and proper to remand the matter back to the Commissioner to hear the matter

afresh and pass appropriate orders taking inter consideration the bank''s letter dated October 11, 1989. So far as the question of limitation is

concerned, it has been argued by learned counsel for the petitioner that as soon as the bank has charged the interest, the petitioner has rushed to

the Income Tax authorities claiming that it is allowable expenditure. I agree with the contentions of learned counsel for the petitioner. The findings

of the Commissioner that the petitions were out of time is set aside. The Commissioner of Income Tax, first respondent herein, is directed to pass

appropriate orders. The impugned order is quashed. The writ petitions are allowed. No costs.