Tribunal rejects Revenue's application for compound interest, upholds simple interest claim under Income-tax Act

The Tribunal rejected the Revenue's application under section 256(2) of the Income-tax Act, 1961, regarding interest charged by the assessee, upholding the claim of simple interest over compound interest based on the evidence presented. The Tribunal found that the document suggesting compound interest did not establish a presumption of compound interest, leading to the rejection of the application as the issue was considered a question of fact.

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The Revenue filed an application under section 256(2) of the Income-tax Act, 1961, requesting the Tribunal to refer a question of law regarding interest charged by the assessee. The controversy was whether the interest was simple or compound. The Tribunal accepted the assessee's claim of simple interest. The Revenue's argument was based on a document found at the assessee's premises indicating compound interest, but the Tribunal held that the presumption of compound interest was rebutted. The application was rejected as the issue was deemed a question of fact.

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