TaxTMI 
TaxTMI 
2003 (12) TMI 359
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....cturing various grades and kinds of nylon cord fabric. The period involved in these proceedings is 12-9-1997 to 30-6-1998. During the period the appellants were extending 45 days credit to their buyers. As a result of the time lag which occasioned in realisation of the payments the appellants were incurring interest cost on receivable. Therefore, the appellants charged at the rate of Rs. 4.60 per Kg. from their buyers as interest expenses due to the extension of credit period to 45 days. This was separately charged in the invoices as PRE. The above amount would cover interest liability on average sale price of Rs. 178/- per Kg. for a period of 45 days. All the buyers were intimated about the charging of PRE as interest cost for credit perio....
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.... appellants that the Commissioner has erred in rejecting the appellants' claim that PRE is interest on receivable. Learned Counsel points out that it is irrelevant as to under which head PRE is accounted. In order to appreciate its character, the appellants referred to letters written to various buyers in regard to PRE and different method adopted in billing during the relevant period. Orders issued by the buyers would also clearly show that they were aware of the character of PRE. 5. We find merit in the contention taken by the assessee. The communications addressed to the buyers as well as the purchase orders placed by them would clearly show that the buyers had understood the nature of payment made by them as PRE. Appellants are fu....