- (1.) THE Tribunal, Delhi has referred the following question of law under s. 256(2) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law confirming the deletion of Rs. 2,70,000 on account of interest on debit balance in the account of M/s Dhampur Yeast Co. Ltd., a subsidiary of the assessee -company, ignoring principles of accountancy -
(2.) BRIEFLY stated the facts giving rise to the present reference are as follows : The respondent -assessee is a limited company which manufactures crystal sugar by crushing sugarcane. During the course of assessment for the asst. yr. 1980 -81 the ITO has disallowed the proportionate amount of interest of Rs. 2,70,000 on the ground that the respondent had given an advance of Rs. 18,80,868 to its subsidiary company M/s Dhampur Yeast Co. Ltd. on which no interest has been charged in appeal. However, the CIT(A) following its earlier order for the asst. yr. 1978 -79 had deleted the amount. The Revenue's appeal before the Tribunal has failed.
(3.) WE have heard Shri A.N. Mahajan, the learned standing counsel for the Revenue and Shri Rakesh Ranjan Agrawal appearing for the respondent and have perused the order of the Tribunal. The Tribunal has held that the respondent has foregone the interest on the debit balance of M/s Dhampur Yeast Co. Ltd. considering its weak financial position and on commercial expediency. Briefly mentioning in respect of the asst. yr. 1978 -79 this very question came up for the similar question in affirmative i.e., in favour of the assessee and against the Revenue. The facts being similar and the Tribunal having relied upon its earlier decision for the asst. yr. 1978 -79, we respectfully following the earlier decision of this Court in IT Ref. No. 196 of 1995, we answer the question of law referred to us in affirmative i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.;