@JUDGMENTTAG-ORDER
R. Jayasimha Babu, J.@mdashThe question referred to us at the instance of the assessee is ;
"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the ''excess'' interest taken into account with reference to the loan to the clients over and above the amount permitted under law as per the directions of the Reserve Bank of India is exigible to tax under the Interest-tax Act ?"
The assessment years are 1981-82 to 1986-87.
2. The assessee is a scheduled bank. In these assessment years it had charged interest to one of its customers at a rate which, it later realised, was in excess of what should have been charged. The interest actually charged was offered for tax but later the assessee wanted to reduce the amount of interest earned by way of income from that borrower for these years to a rate lesser than the one that had been charged and collected. According to it even though the interest should have been charged only at the rate of 12.5 per cent it had charged and collected interest at a higher rate. The amount which the assessee admitted to be excess interest charged was, however, credited to the account of its customer only in October, 1985, and not earlier.
3. The assessee''s claim for reducing the interest income for the earlier years on the ground that interest that had been charged by it was excessive, and was part of what had been subsequently refunded was rejected by the AO, the CIT(A) as also the Tribunal.
4. The assessee admittedly had received the interest in these assessment years. That receipt falls squarely within the computation of chargeable interest u/s 6 of the Interest-tax Act. The mistake realised by the assessee some years later that it should not have charged higher rate of interest, and that it should have charged interest at a lower rate, only resulted in the assessee proceeding to credit the excess amount realised in earlier years to the account of the concerned customer long after the close of these assessment years. The assessee is entitled to the deduction in the year in which the credit was so made. The appellate authority has rightly held that the amount credited as excess interest accrued which was credited in October, 1985, would entitle the assessee to claim the same as a deduction in the asst. yr. 1986-87. The amount so credited was Rs. 5,36,323.
5. The Tribunal has rightly rejected the assessee''s contention. The question referred to us is, therefore, required to be and is answered in favour of the Revenue and, against the assessee.
