Sabyasachi Mukharji, J.
1. In this reference under Section 256(2) of the I.T. Act, 1961, for the assessment years 1963-64 and 1965-66 the following questions have been referred :
' 1. Whether the finding of the Tribunal that it has not been established that the assesses chose to forgo the interest from the two debtors, namely, M/s, Chitrabani and M/s. Chitralok, on ground of commercial expediency and the circumstances in which the interest was forgone are shrouded in mystery, arp based on mere conjecture, surmise nnd suspicion and/or are perverse?
2. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that there was no oral or documentary evidence to show that M/s. Chitralok was financially unsound at any particular point of time and the reasons for making the advances was not substantiated is based on mere conjecture and. surmise and/or is perverse ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was 'justified in law in including' the interest from two debtors, namely, M/s. Chitrabani and M/s. Chitralok, in the income of the assessee ?'
2. For the assessment year 1965-66 an additional question was referred which is as follows:
' Whether, in the facts and circumstances of the case, the finding of the Tribunal that the action of the assessee in not charging interest to Commercial Industries (India) Private Ltd., similarly viewed by the Tribunal for want of evidence in establishing the assessee's claim that there was mutual agreement requiring the assessee to surrender the interest on grounds of commercial expediency is based on mere surmise, suspicio'n and conjecture arid/or is perverse '
3. The rival contentions of the parties have been set out in the order of the Income-tax Appellate Tribunal and the Tribunal has noted in the order the contentions for giving up the interest for these two years from those two debtors. After considering all the evidence which the Tribunal has discussed in detail, the Income-tax Appellate Tribunal in para, 19, observed as follows:
' We have given careful and anxious thought to the rival contentions advanced by both the sides. Coming to the main question of the additions made on account of the transaction with M/s. Chitralok and Chitrabani, we concur in the findings of the lower authorities. There was not evan an agreement reduced to writing in the case of M/s. Chitralok when such huge amounts were advanced. The assessee was not able to give us the present financial condition, whereabouts or activities of M/s. Chitralok or its partners. There was no oral or documentary evidence to show that M/s. Chitralok was financially unsound at any particular point of time. The reasons for making advance were not substantiated and it was merely stated that the advances were made by the assessee to M/s. Chitralok in connection with the distribution or production of some film,'
4. Having regard to the evidence adduced, in our opinion, the Tribunal came to a correct decision and the questions posed must be answered against the assessee.
5. Learned counsel for the assessee sought to urge that it was not obligatory to charge interest because under the mercantile system of accounting, according to him, liability for interest would accrue only at the end of the relevant accounting year. But the contention that the liability did not accrue in the year and, therefore, there was no question of giving up the interest was not argued before the Tribunal. As the contention or the controversy does not arise from the order of the Tribunal on the basis of the materials before the Tribunal which have been discussed in the order of the Tribunal, it cannot be said that the Tribunal's decision or finding was a surmise, conjecture and suspicion and/or perverse. If that is so, the Tribunal was right in holding that the interest from the said two debtors should be included in the income of the assessee.
6. In that view of the matter question No. 1 must be answered in the negative and in favour of the Revenue. Similarly, the answer to question No. 2 is in the negative and in favour of the Revenue. Question No. 3 is answered in the affirmative and in favour of the Revenue.
7. So far as the additional question for the assessment year 1965-66 is concerned, the same is answered in the negative and in favour of the Revenue.
8. Each party will pay and bear its own costs.
Sudhindra Mohan Guha, J.
9. I agree.