Tribunal upholds CIT(A)'s decision on Pooja expenses and accrued interest, dismissing Revenue's appeal.

The Tribunal upheld the CIT(A)'s decision to delete the addition for Pooja expenses claimed by the company, citing that such expenses are for the welfare of labor and wholly for the purpose of business, dismissing the Revenue's appeal. Additionally, the Tribunal upheld the deletion of the addition for accrued interest on sticky loans, as the interest income was deemed not a real liability due to the parties' conduct indicating an abandonment of the claim to receive the interest, dismissing the Revenue's appeal on this ground as well.

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Issues:
1. Deletion of addition for Pooja expenses claimed.
2. Deletion of addition for accrued interest on sticky loans.

Issue 1: Deletion of addition for Pooja expenses claimed:
The appeal by the Revenue against the order of the CIT(A)-I, Raipur for the assessment year 1996-97 involved the deletion of an addition of Rs. 28,696 made by the AO on account of Pooja expenses claimed by the assessee, a company. The AO disallowed the amount spent on Vishwakarma Pooja and purchase of sweets for the Pooja, based on a decision of the Karnataka High Court. However, the CIT(A) deleted the addition, citing a similar deduction allowed in another case. The Tribunal upheld the CIT(A)'s decision, following previous decisions and holding that such expenses are for the welfare of labor and are wholly and exclusively for the purpose of business. The Tribunal dismissed the Revenue's appeal, confirming the deletion of the addition for Pooja expenses claimed.

Issue 2: Deletion of addition for accrued interest on sticky loans:
The second ground of appeal involved the deletion of an addition of Rs. 1,64,343 made by the AO on account of accrued interest on sticky loans. The assessee argued that the interest would be accounted for when received, based on a Board resolution not to charge interest but to pursue recovery of principal amounts due from the companies with sticky loans. The AO, however, added the interest amount to the total income of the assessee, considering the notes on accounts and the possibility of recovery. The CIT(A) relied on a previous case and directed the AO to delete the addition made. The Tribunal reviewed the correspondence and accounts with the debtor companies, applying tests laid down by the Supreme Court to determine the taxability of income under the accrual concept. The Tribunal found that the conduct of the parties indicated a virtual abandonment of the claim to receive the interest, leading to the conclusion that the interest income was not a real liability. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition for accrued interest on sticky loans, dismissing the Revenue's appeal.

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