TRISHLA JAIN Vs. INCOME-TAX COMMISSIONER

JUDGEMENT

(1.) THE instant order will dispose of Income -tax Reference Nos. 43 to 48 of 1991. The controversy in each of the cases being identical, a common order is being passed to dispose of all the six references. It is not a matter of dispute that the assessees in all the six references are individuals being non -residents in terms of Section 6 of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'). Insofar as the factual matrix is concerned, all the assessees had subscribed to two sets of debentures issued by M/s. Oswal Agro Mills Limited. The first set of debentures was issued on 2 -7 -1984; whereas the second set of debentures was issued on 23 -6 -1986. The assessees had paid for these debentures through convertible foreign exchange by remittances from abroad. As such, the assets in the hands of the assessees were in the nature of foreign exchange assets as defined in Section 115C of the Act. The controversy in the present references pertains to the interest income derived by the assessees from the aforesaid debentures. The claim of the assessees is that the aforesaid income derived as interest from debentures should be assessed on receipt basis, and not on accrual basis. The claim of the revenue is to the contrary.

(2.) INTEREST on the aforesaid two sets of debentures was payable biannually. Interest on the debentures accrued on 1st July and 31st December of every year. The issue to be adjudicated upon in the instant six references is, whether interest on the debentures would be deemed to have accrued/arisen to the assessees on 1st July and 31st December, or whether the assessees would be liable to payment of tax on the actual receipt of the interest from the said debentures.

(3.) ON the same analogy as has been noticed here -in -above, the assessees did not include their income derived from interest on debentures, which had accrued/arisen to them during the financial year 1986 -87 for the same reason, namely, that they were not in receipt of the same during the said financial year. The same factual position continued for later years as well, which are the subject of consideration in the connected references.