2015 (8) TMI 928

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....a very lame excuse in disallowing the claim of the assessee towards interest payment on the ground that the assessee did not debit the interest amounts in its accounts for the respective years upto the assessment year 1991- 92. As has been discussed by the CIT(A) in his appellate order for the assessment year 1991-92, the book entries are not at all decisive of allowance of any liability and, on the other hand, if the liability be found to have arisen under the mercantile system, the same is required to be allowed irrespective of whether the amount is debited to the accounts or not. The judgment of the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. (supra) strengthens the argument in this regard. However, the Division ....

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....ich the assessee himself has disputed. He drew our attention to page 2 of the impugned order wherein the findings recorded by the Assessing Officer were noticed by the learned Tribunal which reads as follows : "The AO found out that the Bank had filed a money suit against the company for realisation of the dues which were being disputed by the assessee." Therefore, briefly stated, the facts are that the assessee appears to have borrowed money from bank. The bank has filed a suit for recovery of the money. The assessee has been disputing that liability. The exact nature of dispute is, however, not clear to us. But it appears that the assessee has made some payments on account of interest which has also been reflected in the books of ac....

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.... filed by the bank is evidently on the basis of a contractual liability. The assessee has been disputing the liability. The reasoning adopted by the learned Tribunal that the dispute with regard to principal has nothing to do with the liability on account of interest, according to us, is patently illogical. If the liability on account of principal itself is disputed, there can be no basis for any liability on account of interest. The reasoning adopted by the learned Tribunal is evidently and demonstrably fallacious. Mr. Bhowmik drew out attention to a judgment in the case of Commissioner of Income Tax versus Indian Metals and Carbide Ltd. reported in 1992 (198) ITR 444 wherein the following view was taken : "On consideration of the ri....