Income-tax---

----Income---Accrual of income---Time of accrual---Amount directed to be paid by District Court with interest at 3 per cent per annum from 21-2-1943, till date of order, namely 21-2-1963---High Court enhancing rate of interest to 5 percent. by order passed on 5-6-1972---Extra interest accrued in accounting year relevant to assessment year 1973-74---Indian Income Tax Act, 1961.

The assessee was a private limited company under liquidation represented by a receiver. A receiver was appointed in 1941 but subsequently this receiver was replaced by another receiver with the direction that the former receiver should hand over possession to the latter. At that stage, the former receiver raised an objection that possession could not be directed to be surrendered as long as the money invested by the receiver was not refunded. The District Court went into all aspects of the question and held that the subsequent receiver was to pay the former receiver a sum of Rs.97, 818.19 after adjusting all the claims. The District Court directed this amount to be paid to the former receiver by the latter receiver with interest at the rate of 3 per cent per annum from February 21, 1945, till the date of the order, namely, February 21, 1.963. On appeal to the High Court, the amount was reduced to Rs.82, 891.74 but the rate of interest was enhanced to 5 per cent by judgment, dated September 5, 1972, i.e., in the assessment year 1973-74. The Income-tax Officer took the view that the amount of interest representing the difference of 2 percent. (5 percent. minus 3 percent.) should be deemed to have accrued in the accounting year relevant to the assessment year 1973-74. This view was confirmed by the first appellate authority and the Tribunal in second appeal. On a reference:

Held, that the Tribunal was right in holding that the difference of interest at 2 per cent for various years accrued in the accounting year relevant to the assessment year 1973-74.

Nemo for the Assessee.

V.K. Tankha for the Commissioner.

JUDGMENT

A.K. MATHUR, C. J.---This is a reference under section 256(1) of the Income Tax Act, 1961. In pursuance of the order passed by this Court on 'September 14, 1994, in M.C.C. No.636 of 1985 whereby a reference has been called for by the High Court at the instance of the assessee and the following question of law has been referred by the Tribunal for opinion of this Court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the difference of interest at 2 per cent for various years accrued in the accounting year relevant to the assessment year 1973-74?"

The brief facts, which are necessary for disposal .of this reference, are that the assessee is a private limited company under liquidation and represented by an Advocate receiver. Two official liquidators were appointed in 1941. The first receiver appointed was C.P. Syndicate Limited, and subsequently this receiver was replaced by another receiver with the directions that the former receiver should hand over possession to the latter. It is alleged that at that stage, the former receiver raised an objection that possession could not be directed to be surrendered as long as the money invested by the receiver was not refunded. The District Court went into all aspects of the question and held that tire subsequent receiver was to pay the former receiver a sum of Rs.97, 818.19 after adjusting all the claims. The District Court directed this amount to be paid to the former receiver by the latter receiver with interest at the rate of 3 per cent per annum from February 21, 1945, till the (late of the order, namely February 21, 1963. In appeal to the High Court, the amount was reduced to Rs.82, 891.74 but the rate of interest was enhanced to 5 per cent by judgment of this Court, dated September 5, 1972, i.e., in the assessment year 1973-74. The Income-tax Officer took the view in subsequent proceedings that the amount of interest representing the difference of 2 percent. (5 percent. minus 3 percent.) should be deemed to have in the accounting year relevant to the assessment year 1973-74, overruling the contention of the assessee that the amount should be spread over in the respective years. This view was confirmed by the first appellate authority and the Tribunal in second appeal. Hence, the assessee approached the Tribunal for referring the aforesaid question before this Court and, accordingly, the aforesaid question of law has been referred by the Tribunal for the opinion of this Court.

We have heard learned counsel for the Revenue and perused the records. We are of the opinion that the view taken by the Tribunal appears to be justified and there is no reason to take a different view from the view taken by the Tribunal. Hence, the aforesaid question is answered in favour of the Revenue and against the assessee.

M.B.A./4030/FC???????????????????????????????????????????????????????????????????????????????? Question answered.