Accrual of interest on disputed liability fails where the right to receive interest remains unsettled and only academic reference arises.

Interest did not accrue on the disputed amount where the assessee had denied liability, filed a civil suit, and claimed interest in that proceeding; on that basis, the Tribunal treated the proposed addition as unsustainable. The proposed question under section 256(1) was also held not fit for reference because the legal position on accrual had already been settled by higher courts, making the reference only academic. The application under section 256(1) was dismissed, leaving the matter in favour of the assessee.

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Issues: Whether the proposed question under section 256(1) of the Income-tax Act, 1961 was fit for reference, and whether interest on the outstanding amount had accrued so as to justify the addition.

Analysis: The assessee had disputed the liability to MARKFED and had already instituted a civil suit for recovery, including a claim for interest. In these circumstances, the Tribunal's view that the right to receive interest had not accrued after the institution of the suit was supported by the principle that the accrual of such interest depended on the Court's discretion. The proposed reference was therefore considered to have only academic significance in view of the legal position already declared by the Supreme Court and followed by the Calcutta High Court.

Conclusion: The proposed question was not fit for reference and the application under section 256(1) was dismissed, resulting in a decision in favour of the assessee.

Ratio Decidendi: A question does not warrant reference where, on the settled legal position, the income in dispute has not accrued and the proposed reference would serve only an academic purpose.

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