Accrued interest on assigned debts cannot be taxed before the recovery right crystallises during a pending civil suit.

Interest income on outstanding debts assigned to the assessee was not treated as accrued during the pendency of the civil suit, because no enforceable right to recover that interest had crystallised. The analysis relied on the assessee's earlier case and on section 34 of the Code of Civil Procedure, which indicates that entitlement to interest for the relevant period depends on the decree and the court's determination. On that basis, the first appellate authority's view was treated as fair and reasonable, and the departmental appeal was dismissed following the binding view already taken in the assessee's own case.

---

---

Issues: Whether interest income on outstanding debts assigned to the assessee could be recognised during the pendency of the civil suit and whether the Revenue's appeal deserved interference.

Analysis: The dispute was held to be covered by the assessee's own earlier case. The relevant question was whether, during pendency of the suit, any enforceable right to recover interest had crystallised so as to justify recognition of income. Reference was made to section 34 of the Code of Civil Procedure, which governs award of interest in money decrees and indicates that interest for the relevant period depends upon the decree and the court's determination. In view of the earlier appellate decision and the reasoning accepted therein, the conclusion of the first appellate authority was treated as fair and reasonable.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The departmental appeal was not entertained on merits and was dismissed following the binding view already taken in the assessee's own case.

Ratio Decidendi: Where the right to recover interest on assigned debts has not crystallised during the pendency of the suit, such interest cannot be brought to tax as accrued income.

---