Court rules no interest accrued to assessee on excess deposit with India Habitat Centre, deemed amount non-taxable.

The High Court upheld the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal, ruling that no interest had accrued to the assessee from the excess amount deposited with India Habitat Centre. As both parties agreed that no interest was payable, the claimed amount was deemed non-taxable. The Court found no error of law or jurisdiction, dismissing the Revenue's appeal as no substantial question of law arose.

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Issues:
1. Claim for interest on excess amount deposited with India Habitat Centre.
2. Taxability of the claimed interest amount.
3. Decision of the Commissioner of Income-tax (Appeals).
4. Decision of the Tribunal.
5. Finding of fact regarding interest payment or accrual.

Analysis:
1. The respondent-assessee applied for 15,000 sq.mts. of covered area in a building to be constructed by India Habitat Centre (IHC) and deposited the required amount. Later, the claim was reduced to 8,000 sq.mts., seeking interest on the excess amount deposited. The IHC's governing council refused to pay interest, leading to a dispute.

2. The Assessing Officer taxed Rs. 1,93,36,315 as interest accrued to the assessee. However, the Commissioner of Income-tax (Appeals) ruled in favor of the assessee, stating that no interest had actually accrued as the claim was rejected by IHC and reversed in the assessee's account for the relevant financial year.

3. The Commissioner's decision was based on the understanding that the unilateral entry made by the assessee in its books of account did not conclusively establish the accrual of interest income. The Commissioner considered subsequent events where both parties agreed that no interest was payable, supporting the conclusion that no interest had accrued to the assessee.

4. The Tribunal upheld the Commissioner's decision, emphasizing that the mere entry in the assessee's books of account did not establish the accrual of interest income. Referring to a previous case, the Tribunal highlighted that assessment cannot be based solely on the assessee's concession, especially when both parties later agreed that no interest was due.

5. The High Court concurred with the decisions of the Commissioner and the Tribunal, stating that no error of law or jurisdiction was found. The crucial finding was that no interest had been paid by IHC to the assessee or accrued, making the claimed amount non-taxable. Consequently, the appeal by the Revenue was dismissed as no substantial question of law arose for consideration.

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