COMMISSIONER OF INCOME TAX Vs. MUTHOOT BANKERS

JUDGEMENT

(1.) AT the instance of the Revenue, the following questions have been referred to this court under section 256(1) of the income-tax Act, 1961 (in short, "the Act"), by the Income-tax Appellate Tribunal, Cochin Bench (in short, "the Tribunal") :

(2.) IT is to be noted that the prayer in respect of some other issues was not acceptable.

(3.) ACCORDING to learned counsel for the Revenue, the entries were in the nature of debits and credits, and physical movement of cash was not there. The assessee did not have adequate cash balance to make payment. That is why, disallowances were made. There was, in fact, no genuine interest payment. Though the payee has admitted interest to have been received, in her income-tax return, the amount of interest was shown to be below the taxable limit. The assessee was following the cash system of accounting and was not following the mercantile system of accounting. Therefore, the Tribunal was not justified in its conclusion.