COMMISSIONER OF INCOME TAX Vs. HUDCO LTD.

JUDGEMENT

(1.) THE respondent -assessee was admitted as a member of what is known as India Habitat Centre, a society registered under the Societies Registration Act. A certain piece of land was allotted to the IHC for construction of a superstructure in which superstructure, the assessee was entitled to secure a proportionate covered area. The cost of construction of the superstructure was to be contributed by all the member institutions of the IHC on a no profit no loss basis.

(2.) IT is common ground that the assessee had originally applied for allotment of 15,000 sq. mts. of covered area in the building to be constructed by the IHC and deposited the amount demanded by IHC accordingly. The assessee subsequently reduced its claim for the constructed area from 15,000 sq. mts. to 8,000 sq. mts. and claimed interest on the excess amount deposited by it with IHC. The governing council of IHC, however, declined to pay any interest on the excess amount deposited by the assessee. That decision was communicated to the assessee by IHC's letter dt. 26th said amount had accrued to the assessee by way of interest. In appeal before the CIT(A), the assessee succeeded. The CIT(A) held that the amount indicated above had been unilaterally credited as interest by the assessee without the IHC accepting any such claim. The CIT(A) was of the view (that) since the claim made by the assessee had been rejected and the entry had since been reversed in the assessee's account for the financial year 1995 -96, no interest had actually accrued which could be brought to tax under the provisions of the Interest -tax Act. The above view has been affirmed by the Tribunal in the order under appeal before us. The Tribunal's reasoning is summed up in the following words :

(3.) THERE is, in our view, no error of law or jurisdiction in the view taken by the CIT(A) or the Tribunal. The finding of fact recorded by both the authorities below is that no interest had either been paid by IHC to the assessee or otherwise accrued so as to render the same taxable. In that view, therefore, no substantial question of law arises for consideration. This appeal fails and is hereby dismissed.