The Case Of State Bank Of Travancore v. Commissioner Of Income-Tax Reported In [1986] 158

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.273 OF 2006 Commissioner of Income-tax, Central II, Mumbai - 20 ..Appellant V/s. Hindustan Construction Co. Ltd. ..Respondent Mr.Yogesh Patki with Mr.B.M. Chatterjee for the Appellant. Mr.S.M. Shah for the Respondent. CORAM : D.K. DESHMUKH & J.P. DEVADHAR, JJ. DATED : 31ST JULY, 2008 P.C. : 1. Heard learned counsel for both the sides. 2. The learned counsel appearing for the appellant argued only one point. He did not argue other points because they are covered by our order passed in Income Tax Appeal (L) No.276 of 2006. 3. The learned counsel for the appellant submits that the tribunal erred in upholding the decision of the appellate authority with regard to addition of interest amount recoverable from sub-contractor, which was credited to the suspense account holding that there was no justification in deleting the doubtful advances. 4. Perusal of the order of the tribunal shows that the tribunal has held that the amount due from the sub-contractor itself was doubtful. The learned counsel appearing for the appellant relied upon the judgment of the Supreme Court in the case of State Bank of Travancore Vs. Commissioner of Income-tax reported in [1986] 158 ITR 102 and submitted that the interest of sticky advances had accrued due to mercantile system of accounting and, therefore, the interest earned in this year was assessable to income. The learned counsel on the other hand, in our opinion, rightly relied upon the judgment of the Supreme Court in the case of Uco Bank Vs. Commissioner of Income Tax reported in (1999) 237 ITR 889 (SC) has considered the earlier judgment in the case of State Bank of Travancore and has held that : "..... The very fact that the assessee, although generally using a mercantile system of accounting, keeps such interest amounts in a suspense account and does not bring these amounts to the profit and loss account, goes to show that the assessee is following a mixed system of accounting by which such interest is included in its income only when it is actually received." 5. In our opinion, in view of the law laid down by the Supreme Court in its judgment in the case of Uco Bank, relevant extract of which is quoted above, no fault can be found in the order of the tribunal. 6. The appeal is, therefore, entertained. Hence, dismissed. D.K. DESHMUKH, J. J.P. DEVADHAR, J.