COMMISSIONER OF INCOME TAX Vs. RAJASTHAN FINANCIAL CORPORATION NO 2

JUDGEMENT

(1.) IN respect of the assessment years 1978-79 and 1979-80 at the request of the Revenue, the Tribunal has formulated the following two questions of law arising out of its order dated May 20, 1984, and referred under Section 25.6(1) of the INcome-tax Act, 1961 :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in holding that interest amounting to Rs. 17,65,281 (assessment year 1978-79) and Rs. 17,70,210 (assessment year 1979-80) on cases in litigation could not be treated as income of the assessee ?"

(3.) IN respect of question No. 1, it may be observed that the provisions of Section 36(1)(viii) contemplate that in respect of any special reserve created by a financial corporation, which is engaged in providing long-term finance for industrial or agricultural development in INdia or by a public company formed and registered in INdia with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in INdia for residential purposes, an amount not exceeding forty per cent, of the total income computed before making any deduction under this clause is to be carried to such reserve account.