TaxTMI 
TaxTMI 
2017 (4) TMI 974
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.... 1961 ("Act") is directed against an order dated 16th October, 2015 passed by the Income Tax Appellate Tribunal ("ITAT") in ITA Nos. 1999 & 2000/Del/2008 for the Assessment Year ("AY") 2001-02 and 2002-03. 2. On 23rd February, 2016, while admitting this appeal the Court framed the following question of law for consideration: "Whether on the facts and circumstances of the case and in law, the Special Bench was right in law in holding that the Appellant did not incur the liability to pay interest to Alimenta, directed to be paid by the decree dated 28.1.2000?" 3. The facts leading to the filing of the present appeal are that the Appellant entered into an Agreement with Alimenta SA Switzerland ("Alimenta") on 12th January, 1980 ....
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....preme Court directed NAFED to either furnish a bank guarantee ("BG") or a proper security for the principal amount of the decree. It is stated that NAFED then furnished a BG in the sum of Rs. 22.5 crores for the principal amount. 9. On 8th January 2003, the Supreme Court modified the above order dated 5th April, 2002 and clarified that NAFED would furnish a BG to be renewed from year to year failing which the stay of the execution of the decree would automatically stand vacated. 10. The Assessing Officer ("AO") framed the assessment for the AY 2001- 02 on 28th December, 2007 under Sections 147 read with 143(3) of the Act. The claim of interest payable to Alimenta on the amount awarded was disallowed by the AO by holding that the liabi....
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.... Assessee NAFED and in favour of the Revenue. It was held that since the decree dated 28th January, 2000 was stayed by the Division Bench of this Court on 28th February, 2001, there was no liability on NAFED to pay interest to Alimenta at 18%. 16 This Court has heard the submissions of Mr. M.S. Syali, learned Senior counsel appearing for NAFED and Mr. Dileep Shivpuri, learned Senior Standing Counsel appearing for the Revenue. 17. The reasoning of the Special Bench of the ITAT in the impugned order is that under the mercantile system of accounting, a deduction can be granted only where the incurring of liability is a certainty. A distinction has been drawn between a contractual liability and a statutory liability. The latter is s....
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....expense, becomes wanting." 19. The Court is unable to agree with the above reasoning of the ITAT as it runs contrary to the well-settled legal position explained by the Supreme Court in several decisions. In Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association (1992) 3 SCC 1, the effect of an interim order was explained as thus: "While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, le....