1987 (4) TMI 91

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....h the sides. The assessee is an undertaking of the State Government of Uttar Pradesh. Certain grants were received by the assessee from the Government and since the same were not utilised, funds were put in a bank on which interest was earned. The Revenue sought to tax such interest as it was of the view that interest income belonged the assessee. The assessee contended that as per direction of the Government interest income should be treated as further grant to the assessee from the Government. The assessee, therefore, contended that it cannot be said that the interest income was income of the assessee as actually it was the State Government which was entitled to such interest income but has given the direction that such income should be t....

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....current year since the same accrued after the receipts of the instructions from the Government. The authorities did not accept the contention. They pointed out that the amounts related to the asst. yr. 1978-79 and the assessee was covered by the Payment of Bonus Act, 1965 and the liability accrued in that year and not during the year under consideration. A similar view was taken in respect of payment of pension and other payments. The CIT considered the decision of the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC). Hence this appeal by the assessee. 6. It is submitted before us that the liability did accrue during the year under consideration on receipt of the order issued by the Account....