OM PRAKASH, C.J.: by this application made under s. 256(2) of the IT Act, 1961, the Revenue requires us to direct the Tribunal to refer the following questions for the opinion of this Court :
1. Whether, on the facts and in the circumstances of the case and in the light of the mandatory provision contained in s. 209 of the Companies Act and the limited variation being only by notification dt. 16th May, 1989, and w.e.f. 16th May, 1989, is not the assessee bound to have its method of accounting both with regard to interest earned by the assessee and interest payable by the assessee on accrued basis for the asst. yr. 1989-90 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the interest earned by the assessee and interest payable by the assessee can fall under one source namely income from interest and is not the findings wrong and against law and against the provisions contained in s. 209 of the Companies Act read with the notification dt. 16th May, 1989 which varied the system only with reference to interest earned by the assessee ?
3. Whether, on the facts and in the circumstances of the case and since the cash system of accounting adopted by the assessee does not give the details of actual interest income-
(i) the Tribunal is right in law and fact in holding that the assessee was justified in recording its interest receipts on cash basis ?
(ii) cannot the Revenue as it did in this case adopt the method suitable for arriving at the correct income of the assessee and the Tribunal, also in the light of the decision in CIT vs. British Paints India Ltd. (1991) 91 CTR (SC) 108: (1991) 188 ITR 44 (SC) and proviso to s. 145, is justified under law in interfering with the inclusion of interests on accrual basis ?
2. Inasmuch as the above mentioned question No. 1 with slight modification, in our opinion is a question of law, we direct the Tribunal to refer the following question for the opinion of this Court :
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee rightly followed the different systems of accounting in regard to the interest earned by it and the interests payable by it for the asst. yr. 1989-90 ?
The application is partly allowed.