P. D. Mulye, J. - The IT Appellate Tribunal, Indore, has, at the instance of the department made this reference u/s. 256(1) of the IT Act, 1961 for deciding the following question of law :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that interest income amounting to Rs. 1,21,221 did not accrue to the assessee from Hira Mills Ltd., Ujjain for this assessment year ?'
2. The material facts giving rise to this reference, as set out in the statement of case, may be stated, in brief, thus : The assessee is a private limited company. For the previous year relevant to the assessment year under consideration the return was filed on 20-7-1973 claiming a loss of Rs. 36,695. The said return was revised on 17-2-1976 offering residual interest from Hukumchand Mills at Rs. 1,54,751 as against Rs. 1,56,880 shown originally. The assessee derives income from money lending and Ginning and Pressing factories. It had deposited money with Hira Mills Ltd., Ujjain. The assessee did not debit any interest payable by Hira Mills to its account on the ground that interest income had not accrued. The said contention was not accepted by the ITO. The assessee appealed to the CIT (Appeals) who on the basis of the order passed by this Court in the case of the assessee in respect of the asst. yrs. 1969-70 to 1972-73 held that no income accrued or received by the assessee as held by the ITO. Consequently the ld. CIT (Appeals) deleted the addition. The revenue appealed to the Tribunal. The Tribunal, following the decision of this court confirmed the order of the CIT (Appeals). The revenue has, therefore, made this reference on the ground that the question of law proposed by the revenue did arise out of the order of the Tribunal and may be referred to this court, as the department has not accepted the decision of the High Court and the matter is now pending before the Supreme Court. Accordingly the Tribunal has made this reference as the department wanted to keep the matter alive.
3. It is not in dispute that the assessee has in fact not received any interest as no suit for recovery of interest could be filed by the assessee by virtue of the provisions of s. 4(1) of the M. P. Sahayata Upakram (Vishesh Upbandh) Adhiniyam, 1965 (No. 25 of 1965). The right of the assessee, therefore, to recover interest from the mills could not be enforced. The question which, therefore, arises is can it then be said that the interest income had accrued to the assessee. A Division Bench of this Court in its judgment reported in : 133ITR295(MP) [Sarupchand Hukamchand v. CIT (MP)] has already decided this point in favour of the assessee and against the department as that petition also involved the same question, the parties being the same.
4. In the light of the aforesaid decision, out answer to the question referred to above is in the negative and in favour of the assessee. In these circumstances of the case, parties are directed to bear their respective costs of this reference.