THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN R.C.No.113 OF 1996 Dated:08.09.2010 Between: The Commissioner of Income Tax, Andhra Pradesh-II, Hyderabad .. Appellant And Andhra Pradesh Industrial Infrastructure Corporation Limited, Hyderabad .. Respondent THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN R.C.No.113 OF 1996 ORDER: (per Hon’ble Sri Justice V.V.S. Rao) This reference, at the instance of the revenue, has been made to this Court under Section 259(1) of the Income Tax Act, 1961, as it stood prior to amendment. The following question is referred for our consideration. Whether, on the facts and in the circumstances of the case, the ITAT is correct in law in holding that in spite of adoption of cash system of accounting for interest earned on loans advanced to various co-operative sugar factories, the income of the assessee can be properly deduced when the interest payable by it is being accounted for on accrual basis, and the assessee’s case is not hit by the proviso to Sec.145(1) of the Income Tax Act? Learned counsel for the assessee and the Junior Standing Counsel for Income Tax do not dispute that this question as referred at the instance of the revenue for the previous assessment year, namely, 1980-81, has been answered in favour of the assessee by this Court in R.C.No.159 of 1990 in Commissioner of Income Tax v Andhra Pradesh Industrial Infrastructure Corporation[1]. We perused the judgment of this Court and, respectfully following the same, we answer the reference in the affirmative and in favour of the assessee. _____________ V.V.S. RAO, J ____________________________ RAMESH RANGANATHAN, J 08.09.2010 KH [1] (1999) 236 ITR 648