- (1.) On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions set out at pages 2 and 3 of the paper book : "1. Whether, on the facts and in the circumstances of the case and in view of the circular of the Central Board of Revenue dated October 6, 1952, read with the subsequent circular dated October 9, 1984, issued by the Central Board of Direct Taxes, the Tribunal was justified in holding that the sum of Rs. 1,46,37,731 being the interest on sticky advances and/or debts doubtful of recovery credited during the year in question to the interest suspense account is taxable ?"
(2.) Whether, in view of the specific observation of the majority judgment of the Supreme Court in the case reported in State Bank of Travancore v. CIT that the court was not concerned with the actual effect of the aforesaid circulars and, therefore, the same need not be exempted and the further observation of the majority judgment that on what lines the rights of the parties should be adjusted in consonance with the justice in view of the aforesaid circulars was not the subject-matter adjudicated in the said decision, the Tribunal was justified in not giving the benefit of the circulars to the assessee and in treating the net increase of Rs. 1,46,37,931 in the interest suspense account as the income of the asses-see ?" 2. The assessee is a banking company. The assessment year is 1976-77 and the accounting period ends on December 31, 1975. During the assessment proceedings, the Assessing Officer noticed that a net amount of Rs. 1,46,37,731 being the interest on debts doubtful of recovery has been credited to the suspense account during the accounting period. The case of the assessee was that the interest which has been put in the suspense account is not taxable in view of the circular of the Central Board of Direct Taxes being Circular No. 41 (V-6)D of 1952, dated October 6, 1952. The Income tax Officer did not accept the claim of the assessee. He followed the decision taken by the apex court in the case of State Bank of Travancore v. CIT [1986] 158 ITR 102 and added the interest shown in the suspense account in the income of the assessee.
(3.) The view taken by the Income-tax Officer has been confirmed by the Commissioner of Income-tax (Appeals) as well as by the Tribunal.;