Income Tax Appellate Tribunal - Hyderabad
Andhra Pradesh State Financial Corpn. vs Inspecting Assistant Commissioner on 20 March, 1990
Equivalent citations: [1990]35ITD110(HYD)
ORDER
T.V. Rajagopala Rao, Judicial Member
1. This is an appeal filed by the assessee relating to the assessment year 1985-86 and it arises out of the order of the Commissioner (Appeals) - I, Hyderabad, dated 29-9-1988. The main question involved in this appeal is whether the amount of Rs. 89,60,696 forms part of the income of the assessee or not.
2. The assessee is a company in which public are substantially interested and it was formed to provide long term finance to industries. The assessee is hereinafter called the APSFC. The assessment year involved is 1985-86, for which the previous year ended by 31-3-1985. Admittedly the APSFC collected Rs. 89,60,696 from the loanee concerns towards credit guarantee commission. However, during the accounting year under consideration the said amount was shown under the head 'liabilities', whereas similar amounts collected were accounted for as income in the immediately preceding assessment years.
3. Before deciding the includibility or otherwise of the sum of Rs. 89,60,696 as part of income of the assessee or not it is very essential for us to know about the nature of the credit guarantee commission and how the said commission was modified from time to time. The APSFC filed a paper book and pages 19 to 24 of the said paper book represents a Memorandum to its Board meeting dated 11-9-1985. The evolution of the credit guarantee scheme from time to time was clearly traced out in that Memorandum. It is stated that the credit guarantee scheme for small scale industries was originally introduced by the Government of India in July 1960. The said scheme was administered by a Wing of the Reserve Bank of India known as Guarantee Organisation. The scheme was introduced with a view to encourage the State Financial Corporations and Commercial Banks in sanctioning more loans to the small scale industries and to cover their risks associated in advancing loans to the small scale sector as they are highly vulnerable to sickness. The scheme was intended to cover the consequent losses to the term lending institutions/banks. When the scheme was originally introduced the following were found to be its main features: (1) It was not made compulsory on the part of the lending institutions/banks to cover all the sanctions made by them to the small scale sector under the Credit Guarantee Scheme. (2) Refinance was also not linked up to the coverage of the advances made to small scale sector under the Credit Guarantee Scheme. (3) The Commission was 1/4% per annum of the amount outstanding at the end of each half year which was payable to Reserve Bank of India (Guarantee Organisation). The Credit Guarantee Scheme was revised during 1970 by introducing a comprehensive and revised Credit Guarantee Scheme for small scale industries with effect from February 1970. The APSFC joined the said scheme by entering into an agreement with the Guarantee Organisation on 5-2-1970. The salient features of the revised Credit Guarantee Scheme are found to be as follows : (1) It was made mandatory on the part of the financial institutions/banks to cover all the advances made to the small scale sector under the Credit Guarantee Scheme. (2) All the advances made to the small scale industries which are covered under the Credit Guarantee Scheme are only eligible for concessional refinance from IDBI. (3) The guarantee fee payable to the Guarantee Organisation was further reduced from 1/4% p.a. to 1/10% p.a. However the guarantee fee was enhanced to 1/4% p.a. for loans up to Rs. 25,000 and 1/2% p.a. for loans beyond Rs. 25,000 effective from 1-4-1979. Further modification of the Scheme was contemplated in 1981. The old Scheme which was in force till then was cancelled at the close of business on 31-3-1981 and a modified Scheme was introduced with an intention to put it in force from 1-4-1981. The operation of this modified Credit Guarantee Scheme was entrusted to the Deposit Insurance and Credit Guarantee Corporation (DICGC). Under this modified Scheme the credit guarantee fee was increased from 1/4% to 1/2% per annum in respect of advances up to Rs. 25,000 and from 1/2% to 3/4% per annum in respect of advances above Rs. 25,000 to the small scale industrial units. Under the modified scheme the DICGC shall cover the advances in respect of which no defaults have occurred before the close of business on 31-3-1981 besides fresh advances sanctioned on or after 1-4-1981. The concessional refinance for small scale industrial units will be considered to the loans advanced by all eligible credit institutions subject to their being covered under the Credit Guarantee Scheme.
4. The APSFC and the Uttar Pradesh State Finance Corporation are the two Corporations which appear to have expressed certain reservations and pending clarification from the Reserve Bank of India they have not joined the Scheme as such. Particularly the APSFC felt that there was a substantial hike in guarantee fee fora second time since 1979 and the burden of payment of guaranteefee has become too much having regard to the corresponding benefits accrued from the scheme.
5. The APSFC has been debiting the guarantee fee to the respective loan accounts in respect of loans above Rs. 1 lakh. Even prior to the hike in the guarantee fee the parties were showing reluctance to pay the same to the APSFC resulting in accumulated overdues from time to time. With the increased rates according to the Scheme the problem of recovery of guarantee fee from the borrowers will be increased in view of the revised SSI definition as more number of units will have to be covered under the scheme and thereby the overdues position will be alarming. The APSFC felt that the growth rate of SSI units is about 35 to 40 per cent per half year and in view of the said increase in the business, the Corporation will be forced to appoint more staff for administering the Credit Guarantee Scheme both at Head Office and Branch Offices and the impact on the financial burden to the APSFC would work out to Rs. 30 lakhs. Even according to the existing procedure of absorbing the guarantee fee by the APSFC in respect of loans up to Rs. 1 lakh, the financial burden will be to an extent of Rs. 20 lakhs per annum. But with the above hike in the guarantee fee the recurring financial burden of the APSFC will be further enhanced.
6. After the introduction of the modified scheme and the hike in guarantee fee commission, it would appeals that interest rates charged to small scale industrial units would be higher than the rate applicable to medium sector units. The small scale industries are charged at 14.25%, whereas the medium sector units are charged with 14% per annum. Even after the hike in the rate of commission payable to DICGC the claim for reimbursement was not enhanced beyond Rs. 2.50 lakhs per unit though the fee is to be paid on the entire amount outstanding from time to time. The above anomalies in the modified scheme and the difficulties felt while administering the scheme were highlighted by the APSFC at the Chief Executives Conference of SFCs held in Jaipur during October 1980. In view of the various anomalies in administering the modified scheme and the difficulties the SFCs and other corporation eligible credit institutions were facing in settlement of claims with the Guarantee Organisation, it was unanimously felt that the credit institutions should be given the option of joining this modified scheme and that it should not be made mandatory on the part of the State Financial Corporations to get their loans and advances sanctioned to small scale industrial units covered under the new scheme in order to obtain refinance from IDBI at concessional rates. Thus the SFCs, who had attended the conference felt that the question of refinance of loans and advances sanctioned to small scale industrial units should be delinked with the question of joining the modified scheme introduced with effect from 1-4-1981. It was also felt that the SFCs should be given option either to join or not to join the modified scheme from 1-4-1981.
7. Subsequently in 1982 when the APSFC was advised to join the modified scheme by IDBI in order to get refinance on its advances made to SSI units, at the instance of APSFC, the Government of Andhra Pradesh made representations to the Union Ministers for Industries and Finance requesting to examine the various anomalies in the operation of the modified scheme and to delink the scheme from the refinance scheme of IDBI. However, no decision has come from the authorities regarding the anomalies, etc. since no decision was arrived at on the subject the APSFC could not take any final decision on the subject and was not able to decide whether or not to join the modified scheme operated by DICGC.
8. Pending decision of the APSFC to join or not to join the scheme it had given a letter of undertaking to the IDBI, on the filing of which refinance was released to it in respect of all loans to the small scale industrial units. The undertaking given by the APSFC to the IDBI dated 16-3-1982 is as follows : "We hereby undertake to join the new guarantee scheme operated by Deposit Insurance and Credit Guarantee Corporation (DICGC) with retrospective effect from the 1st April, 1981 and obtain guarantee cover in respect of all loans to SSI units including those in respect of which disbursal of refinance has been sought from IDBI, pending completion of formalities by our institution to join the new scheme, if the IDBI were to negative the proposal to delink refinance from Credit Guarantee Scheme and make the letter optional." So it is clearly stated that in case the IDBI negatived the proposal of the APSFC to delink refinance from credit guarantee scheme and to make the credit guarantee scheme optional then it undertakes to join the new guarantee scheme operated by DICGC from 1-4-1981 and it undertakes to obtain guarantee cover in respect of all loans to SSI units including those in respect of which disbursal of refinance has been sought from IDBI pending APSFC joining the scheme. The APSFC also assured the IDBI that the guarantee commission so far collected from the SSI units from 1-4-1981 onwards would be refunded to them if it is so decided to delink the credit guarantee scheme for SSI units with the operation of refinance scheme with retrospective effect from 1-4-1981. The merits and demerits of the credit guarantee scheme operated by the DICGC was discussed at several conferences of the Chief Executives of SFCs held at Bombay, Goa and Srinagar also. Thereafter certain proposals for rationalising the credit guarantee scheme was stated to have been formulated by DICGC. Even the new proposals in rationalising the guarantee scheme were not acceptable to the APSFC on certain grounds, some of which are as under. Under the scheme the loans sanctioned up to Rs. 25 lakhs are covered. However, the subsequent outstanding may be more say Rs. 30 lakhs. While the APSFC has to pay guarantee commission at 1% per annum during the tenure of the loan, in the event of invoking the guarantee the DICGC would settle the claim amount in default subject to a maximum of Rs. 12.50 lakhs per unit. This in effect would mean that the claim will be settled against part of the principal amount only. Under the proposals of rationalisation the borrowers are put to considerable hardship as the aggregate of interest and the guarantee commission for SSI units in the forward area is 14.5% per annum, whereas for other industries which are not covered under the scheme it is only 13.5% per annum. In respect of units which are not covered by virtue of their sanction of term loans beyond Rs. 25 lakhs the interest charged is 1% less. The APSFC felt that it is a time consuming exercise for settlement of claims besides being very expensive. The settlement of each claim on an average will take six months to one year after protracted correspondence and APSFC has been spending some lakhs of rupees per annum towards administrative expenses for the operation of the scheme. Once a decision is taken by the APSFC to join the modified scheme it has to establish a separate section to look after this work both at branch offices as well as at head offices, which means further recurring expenditure on the administrative side.
9. Thus the pros and cons of joining the scheme were put forward in a memorandum prepared for the Board meeting of the APSFC held on 11-9-1985, which was figuring as item No. 25 of its agenda. On 11-9-1985 after going through the merits and demerits of the modified scheme enumerated in the memorandum the executive body of the Board passed a resolution as follows: "Resolved to authorise the Managing Director to suitably take up the matter concerning the operation of modified Credit Guarantee Scheme with IDBI and request IDBI for further liberalisation of the scheme and to delink it from the operation of the refinance scheme of the IDBI." Till now nothing is heard about the APSFC's request on delinking the question of refinance with entering into the modified scheme with effect from 1-4-1981 and about the option proposed by the APSFC either to join or not to join the modified scheme. Without touching upon the topic with regard to which the board of APSFC had sent its resolution dated 11-9-1985 the IDBI began shooting letters to the APSFC. The letter dated November 1986 is as follows:"... It is observed from our records that your Corporation was regularly remitting guarantee fee together with the statements of guaranteed advances under the captioned scheme for non-industrial sector (i.e. other than SSI advances) up to the half year July-December 1980. However, the remittance of guarantee fee/submission of statements of guaranteed advances were abruptly discontinued for reasons not known to us. We shall, therefore, be glad if you will kindly let us know whether your Corporation has ceased providing finance to the eligible borrowers in the non-industrial sector and consequently you have no advances to report under the captioned scheme. If so, please instruct the concerned officials of your Corporation to furnish to us 'Nil' statements commencing from the half year January-June 1981 to July-December 1986. If not, you may please arrange for immediate remittance of the guarantee fee in arrears, together with interest and also expedite submission of all the overdue statements of guaranted accounts." On 5-12-1986 the APSFC replied to the D.O. letter addressed by the IDBI and it contains the following important matter: "It may kindly be noted that our Corporation has already referred the matter relating to joining the new scheme for SSI units which came into effect from lstApril, 1981 to IDBI and the issue is still pending with them. Having regard to non-payment of guarantee fee and non-submission of statements of guaranteed advances, the matter was kept in abeyance till IDBI reviews the anomalies pointed out by us and takes a final decision in respect of SSI units.
10. For the assessment year 1985-86, for which the previous year ended on 31-3-1985 at page 57 of the Printed Balance Sheet of the APSFC under Scheme 'O' Paragraph 7 a note has been given stating that it had collected Rs. 89,60,696 from loanee concerns towards credit guarantee commission, during the year and the same is shown under 'liabilities', whereas the same was accounted as 'income' till the immediate previous year pending final decision on 'delinking of DICGC scheme from the refinance scheme. The company has not accounted this sum as income of this year. The Income-tax Officer felt that with the result of this change in accounting of the APSFC the income for the assessment year 1985-86 was lower by Rs. 89,60,696 as per its own admission in the note. The matter was put for clarification of the APSFC and theAPSFC filed a note dated 12-1-1988. In the said note it was stated that the amount collected from the loanee institutions is to be paid to the DICGC if a final decision is taken to be so. If on the other hand, it is finally decided that the APSFC should not participate in the credit guarantee scheme, the amount is to be repaid to the loanee institutions and in either case the Corporation would not retain this money. The APSFC under those circumstances claimed that the amount should not be treated as income. However, the Inspecting Assistant Commissioner (Assessment) Range-I, who completed the assessment under Section 143(3) dated 25-1-1988 felt that there is no change in the circumstances when compared to the prior years. The APSFC showed this amount as income in the earlier years. Therefore, there is no reason why this amount of Rs. 89,60,696 should not be considered as income for this year also. However, the Inspecting Assistant Commissioner observed that in case the assessee-company makes over payments also to DICGC or returns the amount to the loanee concerns, it would be considered according to law at the time when the payments are made. In the present circumstances, however, the inspecting Assistant Commissioner felt that this sum of Rs. 89,60,696 should be added as the business income of the APSFC.
11. Aggrieved against this and other additions the assessee went in appeal before the Commissioner (Appeals). It was contended before the Commissioner (Appeals) that since some practical difficulties were found if the scheme were to be employed the APSFC had requested that the scheme may be made merely optional and not mandatory and no decision on its request was taken by the Government till now. In the meantime theAPSFC collected guarantee commission as a measure of abundant caution from the loanee industries. This amount is payable to the DICGC in the event ofthe scheme being held to be mandatory. However, in the event ofthe same being declared optional only, the commission is to be returned to the customers from whom it was collected. In either of the circumstances these moneys are held by the APSFC only in a fiduciary capacity since it was not open to it to appropriate the amounts as if the appellant was the owner of these funds. The correct amount of commission payable to DICGC for this accounting year worked out of Rs. 1,10,00,000 and this was not claimed as a deduction since the payment itself was uncertain. In case the commission is held to be the income of the APSFC for any reason then the amounts payable in turn by the APSFC to the DICGC will have to be allowed as a deduction. It is complained that though these several matters were brought to the notice of the Inspecting Assistant Commissioner he completed the assessment without discussing any one of these aspects and hence the assessment should be set aside. Before the Commissioner (Appeals) it was submitted that the APSFC was following cash system of accounting and not mercantile, though it was wrongly stated to be so in the assessment order. The learned Commissioner (Appeals) purporting to follow the Supreme Court decision in Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542, felt that theAPSFC may not be justified in claim ing deduction for the amount payable by it in its turn to the DICGC on accrual basis and since the amounts were collected from customers in the course of its business activity, the inclusion of the same as part of APSFC's receipt appears to be quite justified. He held that applying the ratio of the Supreme Court decision in Chowringhee Sales Bureau (P.) Ltd's case (supra) the Inspecting Assistant Commissioner should be held to have rightly included the amount in question as income of the APSFC. Further the APSFC has been admitting similar amounts collected in previous years as part of its income. If the APSFC has been adopting mercantile system, then it might be entitled to claim the corresponding amount payable by it to the DICGC as a deduction in its assessment. Since the APSFC has been following the cash method of accounting the corresponding liability to the DICGC cannot be permitted as a deduction since the amount was not actually paid to it. On that ground the learned Commissioner (Appeals) sustained the addition.
12. The APSFC came up in second appeal before this Tribunal and thus the matter stood for our consideration. It is the contention of the APSFC that since the amount of Rs. 89,60,696 was collected towards credit guarantee commission it should be held to be not its income. It was contended that the credit guarantee commission had to be paid either to DICGC or should be paid back to the loanee institutions from whom it was collected. The APSFC is merely an agent and this amount is collected in a fiduciary capacity and as such it should not partake the character of 'income' in its hands. Since the amount does not partake the character of income at all the question of taxing the same as income in the year of receipt and allowing the said amount as expenditure in the year of payment does not fall for consideration. Shri Rathnakar, the learned advocate for APSFC tried to distinguish the decision in Chowringhee Sales Bureau (P.) Ltd.'s case (supra), which has been very much relied upon by the learned Commissioner (Appeals) in order to sustain the addition made by the Inspecting Assistant Commissioner (Assessment). It was not the case of the assessee in the above case that he was not the owner of the amount collected towards sales-tax. It was his contention that there was no sale and the State Government is not legally entitled to levy sales-tax. In this case the assessee never claimed ownership to any part of the guarantee commission collected from the loanee institutions. It was always the case of the APSFC that if the modified scheme was held mandatory and there is no option for it except to join the scheme then the amounts collected towards guarantee commission would go to the DICGC, but if the modified scheme is clarified by the IDBI as optional then the guarantee commission collected will be refunded to the loanee institutions. In either case it was not the case of the APSFC that the guarantee commission was part of its trading receipts or any part of the commission collected belongs to it. Shri Rathnakar contended that in the above mentioned Supreme Court decision the assessee never acted in a fiduciary capacity, whereas in the case before us the admitted case of the assessee was that it occupies the character of a trustee as regards the payment of guarantee commission collected by it right from 1-4-1981. We accept these points of distinction and w,e hold that for these the Supreme Court case is distinguishable from the facts of the present case.
13. Let us examine the nature of the guarantee commission. The whole modified scheme appears to us to be as follows. The role of DICGC in the modified scheme appeared to be analogous to an insurer against loss or a guarantor for and on behalf of the small scale units to whom the APSFC and other financial institutions advanced moneys. The loans granted to the SSI units often go risky since those units often go sick and the realisation of the loans would not be possible to the financial institutions. The role of the DICGC appears to be that it would guarantee repayment of loans taken by the SSI units from the APSFC. The premium it receives from the SSI units through the APSFC would be a consideration for the DICGC to stand as a surety for such SSI units. The DICGC makes up the loss if any sustained by the APSFC in respect of loans advanced to the SSI units of course within agreed limits. The loanees (SSI units) having borrowed from theAPSFC go on repaying the loans and also provide insurance cover for the outstanding by guarantee commission to the DICGC. The role of APSFC appears to be that of a post office. Whatever guarantee commission it receives from the loanees it has to make over to the DICGC. The guarantee commission belongs to the DICGC and cannot form part of trading receipt of the APSFC. This position was made clear in its letter dated 12-1-1988 addressed to the Inspecting Assistant Commissioner (Assessment). It is clearly mentioned that the APSFC stood only as a trustee for the moneys collected towards guarantee commission. The undertaking letter given by the APSFC dated 16-3-1982 which is already extracted above on the strength of which refinance was released to the APSFC would go to show that APSFC had undertaken to obtain guarantee cover in respect of loans to SSI units including those in respect of which disbursal of refinance has been sought from the IDBI and it had undertaken to join the scheme with retrospective effect from 1-4-1981. This would clearly show that the APSFC had undertaken to make over the guarantee commission collected from the loanee institutions to the DICGC. There is no option left to the APSFC except to join the modified scheme introduced from 1-4-1981. On 11-7-1985 the IDBI addressed a letter to the APSFC in which it is stated that as regards guarantee commission collected by APSFC from SSI units they feel that the same should be refundedi to the respective borrowers. The IDBI also elicited information as to the present position with regard to APSFC's practice of levying guarantee fee on the borrowing units. The proforma for loan application which has to be submitted in duplicate alongwith a covering letter whose proforma also was filed by the APSFC at pages 1 to 12 of the paperbook, specifies condition No. 11 as follows: "The industrial concern shall pay credit guarantee commission @ 3/4% p.a. on the outstanding loan balance as on 30th June and 31st December of each year during the tenure of the Corporation's loan and that the corporation shall have the right to alter the rate of Guarantee Commission on all SSI loans commensurate with the alterations of the same by the Credit Guarantee Scheme during the tenure of the loan." From the above stipulation it is very clear that the duty to pay credit guarantee commission is that of the loanee institution and the person to whom it is payable is DICGC. In those circumstances we hold that no part of the Guarantee Commission collected can be considered to be a trading receipt in the hands of APSFC. We also hold that the Supreme Court decision in Chowringhee Sales Bureau (P.) Ltd. 's case (supra) is quite distinguishable from the facts of the present case, since in that case the assessee always maintained that while keeping custody of the sales-tax amount collected it is not liable to pay sales-tax, since the auction sale is not a sale and the State Legislature is not entitled to levy sales-tax. The assessee in that case did not pay the sales-tax amount to the seller of the goods or paid the amount to the State Government. In the receipts passed by it the assessee was only shown to be the seller of the goods. However, in this case even at the time of receipt it was made clear by the APSFC that the amount of Guarantee Commission should go to the DICGC and does not form part of its trading receipt. Thus there is distinction between the Supreme Court decision and the present case before us.
14. The learned counsel for the APSFC contended that from the very moment of receipt of the Guarantee Commission it was received for and on behalf of either DICGC to which it ultimately should go if the scheme is accepted by the APSFC or it should be refunded to the loanee institutions if the scheme is made optional and the APSFC actually opted out of the scheme. Therefore such a receipt should not be considered to be a trading receipt at all in the hands of the APSFC, since it does not bear the character of income at all in the hands of the assessee. Reliance was placed on the Andhra Pradesh High Court decision in CIT v. Devatha Chandraiah & Sons [1985] 154 ITR 893. In that case the assessee-firm acted as a commission agent on behalf of the agriculturist principals, who sold their produce through the assessee. The assessee maintained accounts on mercantile basis. It had collected sales-tax from the customers and paid sales-tax also to the State Government. Part of the sales-tax was refunded. The assessee made suitable entries and also made separate accounts for each agriculturist and credited it with the amount of refund. The Income-tax Officer sought to assess the amount ofrefund as part ofthe income of the assessee. The Appellate Assistant Commissioner and the Tribunal, however, held that it was not assessable in the hands of the assessee. The High Court held that the money representing the sales-tax had been received by the assessee in a fiduciary capacity on behalf of the agriculturist principles and the same did not constitute trading receipts in the hands of the assessee. In any event since the assessee followed the mercantile system of accounting which created a liability to repay the sales-tax to its principals, as and when it was refunded, the same could not be included in its income. In the present case also since the APSFC always treated the Guarantee Commission received as either belonging to the DICGC or to the loanee institutions it does not form part of its income at all.
15. Next it is contended that the Guarantee Commission was collected under separate head and it was not mixed up with the other trading receipts even at the time of its receipt and, therefore the identity of the Guarantee Commission should always remain and it would never become part ofthe trading receipt of the APSFC. In support of this contention the learned advocate cited before us the decision of the Supreme Court in CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60. In that case the assessee which is a private company carrying on business of manufacturing and selling yarn had realised amounts on account of 'Dharmada' from its customers on sales of yarn and cotton, at the rate of one anna per bundle of 10 Lbs. of yarn and two annas per bale of cotton. In the bills issued to the customers these amounts were shown in a separate column headed 'Dharmada'. The assessee did not credit the amounts so realised by it in its trading account, but maintained a separate account known as the 'Dharmada account', in which the realisations on account of Dharmada were credited and payments made thereunder were debited. The Tribunal held that the amounts could not be regarded as trading receipts. The High Court reversed that finding. On appeal the Supreme Court held that the 'Dharmada' amounts could not be regarded as part of the price or a surcharge on the price of goods purchased by the customers. The amount of 'Dharmada' was undoubtedly a payment which a customer was required to pay in addition to the price of the goods which he purchased from the assessee, but the purchase of the goods by the customer would be an occasion and not the consideration for the 'Dharmada' amount taken from the customer. It was true that without payment of the 'Dharmada' amount the customer might not be able to purchase the goods from the assessee but that did not make the payment of 'Dharmada' involuntary inasmuch as it was out of his own volition that he purchased yarn or cotton from the assessee. The 'Dharmada' amount was, therefore, not a part of the price, but a payment for the specific purpose of being spent on charitable purposes.
In this case also there was a stipulation in the agreement that the Guarantee Commission should be paid apart from repaying the loan. The assessee has filed before us a model receipt which it passes as and when payments are received from the loanee institutions (SSI Units). There are eight heads into which the payments were divided. They are : (1) Interest Arrears, (2) Other Expenses Arrears, (3) Commitment Charges Arrears, (4) Deposit for Commitment Charges, (5) Service- Charges, (6) Credit Guarantee Commission Arrears, (7) Loan instalment and (8) EMD/Sundry/Margin Money. Thus it is clearly to be seen that credit guarantee commission would be received separately and it would be remitted to a separate account and it is intended to be paid only to the DICGC or to return to the loanee institutions. Therefore, even though the payment of Guarantee Commission is not voluntary, inasmuch as it was made obligatory under Clause 11 of the agreement, but still as per the above decision of the SupremeCourt the payment is to be considered as involuntary and according to the own volition of the loanee institutions. Following this decision we have to hold that the amounts collected towards credit guarantee commission would not form part of trading receipt of the assessee.
16. It was also the contention advanced on behalf of the APSFC that the APSFC was only a trustee with regard to the collection and payment of credit guarantee commission. The credit guarantee commission was agreed to be payable to DICGC in case the APSFC agreed to join the scheme from 1-4-1981 and if the APSFC was given the option either to join or not to join the modified scheme and in case the refinance scheme was not tagged on with the necessity of joining the modified credit guarantee scheme, then in case the APSFC opted out of the scheme, it always agreed to return the amount of credit guarantee commission to the loanee institutions. The legal effect of these facts would constitute the APSFC as trustee of those amounts collected and by virtue of overriding title the amounts collected towards credit guarantee commission should not be considered as part of the trading receipts in the hands of the APSFC. To support this legal proposition the learned counsel, Shri Rathnakar has cited the Supreme Court decision in CIT v. Tolly gunge Club Ltd. [1977] 107 ITR 776. In that case the assessee was a social and sports club, which had conducted horse races with amateur riders and charged fees for admission into the enclosure of the club at the time of the races. In 1945 a resolution was passed at the general body meeting of the club for levying a surcharge of eight annas over and above the admission fees and it was agreed that those proceeds should go to the Red Cross Fund. This resolution was varied by another dated 30-1-1950 to the effect that the surcharge should be earmarked 'for local charities and not solely for the Indian Red Cross'. Every entrant was issued two tickets, one an admission ticket for admission to the enclosure of the club and the other a separate ticket in respect of the surcharge of eight annas for local charities. The question was whether receipts on account of the surcharge were to be treated as the assessee's income. The Supreme Court affirmed the decision of the High Court as well as the Tribunal and held that the surcharge was not part ofthe price for admission but was apayment made for the specific purpose of being applied to local charities. Since a resolution was passed at the general meeting for levying the surcharge for local charities and pursuant to this resolution the surcharge was paid by the race-goers and received by the assessee for the specific purpose of being applied to local charities, the surcharge, when paid, was clearly impressed with an obligation in the nature of trust for being applied for the benefit of local charities and was by that obligation diverted before it reached the hands of the assessee and at no stage became part of the income of the assessee. Their Lordships of the Supreme Court held that it is a settled law that a trust may be created by any language sufficient to show the intention and no technical words are necessary and it may even be created by the use of words which are primarily words of condition. In view of the above decision it should be held that the amount collected never formed part of trading receipts of the assessee, since it was always received under credit guarantee commission paid and there is thus a diversion by overriding title even at the time of receipt.
17. It is next contended that if at the time of receipt the amount is received as trading liability, the accumulation of such receipt would not be income, however, huge the accumulation may be. For this proposition reliance was placed on the Allahabad High Court decision in Upper India Sugar Exchange Ltd v. CIT [1969] 72 ITR 331. In the headnote of this decision it is held as under :
"If the amounts initially received partake of the character of a trading receipt, the unclaimed accumulations of such receipt would necessarily be taxable as such; if, however, the amounts are initially the trading liability of the assessee, the unclaimed balances cannot be taxed despite the magnitude of the accumulation and despite its appropriation by the assessee to his own credit. In the present case, the amounts initially received by the assessee were its trading liabilities and, therefore, the amount in question is not liable to be assessed as the income of the assessee." Applying the principle of this case to the facts on hand, the learned advocate submitted that the guarantee commission was collected separately. From the beginning the receipt was towards the discharge of a liability of the APSFC. In the balance sheet prepared for the assessment year under consideration it was noted under schedule 'O' paragraph 7 that the amount of Rs. 89,60,696 was shown under the head 'liabilities'. Therefore the amount in question cannot be treated as the income of the APSFC at all.
18. The learned advocate for the APSFC cited the Allahabad High Court decision in Addl. CIT v. Brijlal Gupta [1974] 94 ITR 88. The assessee in this case is a senior advocate. He received a professional income of Rs. 80,745. He claimed 10% of the amount for being paid as clerkage to his clerical establishment and contended that it was not his income. When the question came up ultimately before the High Court, the High Court took up the question whether a senior advocate can engage a clerk and it was ultimately found that a senior advocate also can engage a clerk and the argument that a senior advocate's clerk had no function whatever to perform and if a senior advocate maintains a clerk that practice is illegal, was found to be not correct. In the case before their Lordships of the Allahabad High Court it was found as a fart that the assessee did maintain a clerical establishment and it was also not disputed that he received the disputed amount as clerkage only. The High Court held that receipt of the clerkage by a senior advocate was not illegal or invalid and ultimately they held that the receipt of the amount was not part of the professional income of the assessee. This decision was cited to show that when the receipt was not always the trading receipt of the assessee but always payment to DICGC, the amount of Guarantee Commission collected does not form part of the income of the assessee at all.
19. Next our attention was invited to the Calcutta High Court decision in CIT v. Sandersons andMorgans [1970] 75 ITR 433. The assessee before the Calcutta High Court was firm of solicitors. In the profit and loss account the assessee had shown a sum of Rs. 4,078 only as credit representing the aggregate of unclaimed balance in as many as 83 personal ledger accounts of the assessee's clients, who had advanced money to them in connection with cases entrusted with the assessee some years back. Even after final adjustments of bills small balances continued to be carried forward from year to year till December 31,1956, when the assessee thought of closing the accounts of the clients and transferred the balances to the profit and loss account. This amount of Rs. 4,078 was ultimately apportioned as between the partners of the assessee in their respective profit sharing ratio. The question was whether the amount of Rs. 4,078 can be considered to be the professional income of the assessee. The Calcutta High Court held that the sum of Rs. 4,078 was not a revenue receipt liable to income-tax. When a solicitor receives money from his client, he does not do so as a trading receipt but he receives the money of the principal in his capacity as an agent and that also in a fiduciary capacity. The money thus received does not have any profit making quality about it when received. It remains money received by a solicitor as 'client's money' for being employed in the client's cause. The solicitor remains liable to account for the money to his client. The fact that the money was paid to the solicitor by a client will not make any difference, if initially the money was not received as trade receipt. This decision was sought to be pressed into service for the argument that firstly the Guarantee Commission was a separate category of receipt and it was never intended to be received as part of the trading receipt by the APSFC and the APSFC would be a trustee for DICGC with regard to the Guarantee Commission collected if ultimately the APSFC, joins the modified scheme of 1981. If does not join the scheme according to the option open to it, which may be conceded by the IDBI, then the money collected towards Guarantee Commission is liable to be paid to the loanee institutions and it becomes an agent for those institutions and in which case the APSFC stands in a fiduciary capacity even with regard to the loanee institutions.
20. Another decision cited before this Tribunal is that of the Bombay High Court in the case of CIT v. Tanubai D.Desai [1972] 84 ITR 713. The headnoteofthesaid decision is found to have revealed the ratio of the same, which is as follows :
"In view of the provisions of the rules of the Bombay High Court on its original side, the position of a solicitor vis-a-vis the money received by him from or on behalf of his clients is that of a quasi-trust and he holds such moneys in a fiduciary capacity and the income orinterest derived from such moneys is equally held by him subject to such fiduciary relationship existing between the solicitor and his client. If the solicitor unauthorisedly converts the income from the client's moneys, the taxation must proceed on the basis that the income did not in fact belong to him and the income is not liable to be taken into computation in his personal assessment". This decision was canvassed for the proposition that in cases where the assessee treats the receipt of moneys of its clients as its own and derives income from those moneys even then the income derived from those moneys cannot be taxed in the hands of the assessee. This ratio would go to show that even supposing the APSFC treats the Guarantee Commission as part of its trading receipts and if any income is derived therefrom by the APSFC, even then such income cannot be taxed in the hands of APSFC. It is submitted by the learned advocate that the ratio of this decision covers an extreme position of converting others moneys as assessee's own and deriving income from them, which is not the case before us.
21. The next decision cited is that of the Calcutta High Court in CIT v. Karam Chand Thapar & Bros. (CoalSales) Ltd. [1979] 117 ITR 621. The question debated before the Calcutta High Court was whether 'under-charges' are assessable in the hands of the assessee. In that case the assessee was a del credere agent of the collieries and also the agent of the consumers. It collected from the consignees only the sale price of the coal which was despatched by the collieries to the consumers, the freight being paid by the consumers to the railways. As the freight was not charged on the actual weight of the coal despatched but on thecarrying capacity of the wagon, the assessee claimed from the colliery the extra freight incurred where the freight was charged on a weight more than that of the coal actually despatched. The under-charges are being collected under the following circumstances. After the coal is loaded, the colliery sends the consignment forwarding note to the consignee who collects the coal after paying the freight charges, a copy of the same is forwarded to the assessee. From the copy of the forwarding note the assessee checks up the actual weight charged in calculating freight and if it is found that freight has been charged on a weight greater than that of the coal actually despatched then a claim is lodged with the colliery for refund of this extra freight charged. This is known as 'under-loading charges' shortly referred to as 'under-charges'. The assessee collected the under-loading charges from the colliery, independent and irrespective of any demand from the consignees. Some of the consignees demand the under-charge and the assessee passed on the amounts received by it. There were also cases where the amounts were not demanded. The question of assessability of under-charges collected and not demanded by the consignees fell for consideration before the Calcutta High Court. Negativing the contention of the Revenue the Calcutta High Court held that the amounts collected by way of under-charges had been received by the assessee as an agent and, therefore, in a fiduciary capacity vis-a-vis the consignees. Such amounts did not constitute trading receipts and accordingly neither the surplus of the receipts remaining unpaid nor the amounts transferred by the assessee to the profit and loss account could be assessed as income of the assessee. This decision was pressed into service only to show that the collection of credit guarantee commission does not form part of trading receipts in the hands of the assessee and it was also sought to be made use of even in a case where the amounts collected towards credit guarantee commission were offered as income of the assessee in earlier years, they do not become either the trading receipts or the income of the assessee under law.
22. The next decision cited before us by the learned advocate for the APSFC was the decision of the Calcutta High Court in Bengal & Assam Investors Ltd. v. CIT [1983] 142 ITR 156. In that case the assessee acted as an insurance agent for several companies and in the course of its general insurance agency business, collected amounts on account of insurance premium from its clients and paid the same to the insurance companies. In the process of rendering this service to the clients, the assessee collected some excess amounts from the clients over the years, which were neither paid to the insurance companies nor refunded to the clients. The clients also did not claim refund of these amounts. The unclaimed amount stood at Rs. 44,937 at the end of the previous year when the same was transferred to the credit of the profit and loss account as miscellaneous income. The taxability of this sum in the hands of the assessee was the question debated before the Calcutta High Court. The Calcutta High Court firstly considered a legal relationship between the insurance agent and the policy holder and found that there was a fiduciary relationship between the agent and the principal. The assessee received the amount of rebate on behalf of or as an agent of the principal. Moreover the taxability of an amount must be determined on the nature of the receipt and the capacity in which it was received, etc. The subsequent writing off or subsequent conduct or subsequent entry in the books of account will not affect the position. Therefore, the sum of Rs. 44,937 could not be assessed as the income of the assessee during the relevant assessment year. This decision was cited in support of the plea that the APSFC collected the guarantee commission only as an agent and for and on behalf of DICGC, but never as part of its trading receipts. The nature of the receipt should be determined having regard to the capacity in which it was received. When once the nature of the guarantee commission was determined with reference to the capacity under which it was received, the subsequent conduct of the APSFC from the subsequent entry of the said guarantee commission in the books of account of the APSFC will not affect the true legal position of the said receipt. Therefore simply because for some years the amount is taken as income of the APSFC in the earlier years it does not estop the assessee to contend either the real nature of the receipt or the taxability of it.
23. The next decision cited on behalf of the APSFC was the Andhra Pradesh High Court decision in CIT v. Andhra General Finance Corporation [1985] 156 ITR 386/20Taxman312. In that case the assessee was a registered firm carrying on business as financiers under hire purchase arguments. It advanced money on hire purchase agreements to the intending purchasers of motor vehicles against hypothecation of the vehicles. The loans advanced were repayable in instalments, together with the stipulated interest thereon. In addition, the assessee also collected from its constituents certain amounts payable by them to the Hindustan Ideal Insurance Company (HIIC) towards premia on account of 'accident insurance policies' taken on the vehicles. Initially, the amounts collected were credited to the accounts of the individual constituents. But subsequently, the same were transferred to the account of HIIC. From the said account regular payments towards premia of insurance were made to the company. After making payments, there was an excess of Rs. 12,370 in the account of HIIC. That was carried forward from year to year for the last ten years or more prior to the assessment year 1974-75. The hire purchase agreements in respect of the vehicles to which the excess of receipts related came to an end the vehicles had been transferred to the purchasers long ago. The excess amounts were sought to be considered as income of the assessee. The Andhra Pradesh High Court ultimately held that the collections were either in the nature of voluntary deposits made by the constituents of the assessee or were made on demand by the assessee from the constituents for the specific purpose of payment to the HIIC towards premia of insurance in respect of vehicles purchased by them. If the collections were in the nature of voluntary deposits, the assessee held the same in a fiduciary capacity for the specific purpose of payment of premia of insurance in respect of the vehicles purchased by the constituents and the assessee was under an obligation to return the excess amounts to the constituents after payment of premia of insurance. The fact that the assessee treated the amounts as its income in the assessment year in question is immaterial and irrelevant and not conclusive, for, there is no estoppel against the statute. It is the nature of the receipt that determines its tax liability. Therefore, the sum of Rs. 12,370 did not represent trading receipt of the assessee and the same could not be assessed to tax in the assessment year 1974-75. This decision was also pressed into service in support of the plea that either the subsequent treatment by the APSFC or the fact that it had surrendered this amount as part of income in earlier years does not actually change the character of the original receipt. When once the original receipt is in the capacity of a trustee the amount received cannot be considered to be belonging to the APSFC at all.
24. The next decision cited on behalf of the assessee is the decision of the Karnataka High Court in CIT v. CanaraBank [1989] 175 ITR 601/44 Taxman 254. In that case the question was whether the sum of Rs. 80,55,976 did not represent interest income at all. According to the assessee the correct interest income to be taken into account was the net income after setting off the rediscounting charges paid to the Reserve Bank of India and the Industrial Development Bank of India under the IDBI Bills Rediscounting Scheme. The Income-tax Officer as well as the Appellate Assistant Commissioner rejected the contention put forward by the assessee and treated the impugned sum of Rs. 80,55,976 as part of income of the assessee. However, the Tribunal, on an interpretation of the Bills Rediscounting Scheme, held that the transaction entered into between the purchaser and the bank under the scheme was one integrated transaction and the rediscounting of the bills by the assessee with the Industrial Development Bank of India could not be considered as a separate transaction. The Tribunal also held that even though a larger interest was collected from the purchaser, the assessee-bank had to pay a portion of it to the Industrial Development Bank of India in accordance with the scheme and also undertook to get those rediscounted bills back by paying them well in advance of the due dates and recoup itself when the accept or made the payment and, hence, the interest that accrued to the assessee was only the net and not the gross interest received. The Tribunal also held that there was an overriding title of the Industrial Development Bank of India whereby the assessee had to part with a good portion of the interest received from the drawer of the bills to the Industrial Development Bank of India and, therefore, only the net interest was chargeable under the Interest Tax Act, 1974. When the matter was referred to the High Court it was held that the Bills Rediscounting Scheme was introduced by the Industrial Development Bank of India under Section 9(1)(b) of its statute to push up sales of indigenous machinery by offering deferred payment facilities to prospective purchasers. Under the scheme, the Industrial Development Bank rediscounted the bills discounted by its approved institutions. The buyers of machinery under the scheme had to obtain through their bank prior clearance of the Industrial Development Bank for discounting the bills. One of the crucial features of the transaction under the scheme was that the discounting bank, availing itself of the rediscounting facilities from the Industrial Development Bank of India, could not charge the manufacturer or seller discount at rates higher than 1.75 per cent over the rediscounting rate charged by the Industrial Development Bank of India. The manufacturer/seller was also prohibited from charging interest for the deferred payment period at an amount which was higher than the amount paid to the bank. If, on discounting the bills, any excess amount was found to have been charged, the same should be refunded to the purchaser through the discounting bank. The Industrial Development Bank of India had thus the right to refuse rediscounting of bills of such manufacturers/sellers who did not strictly comply with these requirements. The rediscount rates of the Industrial Development Bank of India collected by the assessee-bank could not be 'chargeable interest' inasmuch as even before the said amount reached the hands of the assessee, it was impressed with the character of rediscount charges payable to the Industrial Development Bank of India. Under the Scheme, the assessee-bank was only a medium or conduit pipe for disbursement of the development fund for the implementation of the scheme for which it could retain upto 1.75 per cent which alone accrued to the bank and in respect of the remaining interest received from the purchaser on the advance made to him, there was an overriding title of the Industrial Development Bank of India. Ultimately the High Court held that the Tribunal was right in holding that the sum of Rs. 80,55,976 representing the rediscounting interest paid on bills did not form part of the interest income of the assessee chargeable under the provisions of the Interest Tax Act, 1974. This decision is stated to be very near to the facts on hand. It was also cited to impress upon us that just like the assessee in that case the APSFC acts only as a conduit pipe or a media for collecting and making over the guarantee commission from the loanee institutions to the DICGC. It is also cited to be pressed into service for the proposition that the amount of Rs. 89,60,696 collected as guarantee commission cannot be considered to be the income in the hands of the APSFC. The learned counsel wanted to impress upon us the fact that just like in the case before us, in the case decided by the Karnataka High Court also there was a scheme under which the IDBI is entitled to rediscount the bills and just like the State Financial Corporation in this case who had agreed to join the scheme there are approved institutions and banks under the IDBI Bills Rediscounting Scheme in the facts before the Karnataka High Court. The argument that the facts in the Karnataka case are quite similar to the facts on hand before us appears to be not acceptable. However, we agree that the ratio of the Karnataka High Court decision does help to advance the case of the assessee before us. Inasmuch as even in the facts before us in every agreement executed by the loanee institutions (SSI Units) though the DICGC was not a specified party to the agreement, yet Clause 11 of the model agreement, which is extracted above would clearly show that there is a specific stipulation under which every loanee institution agreed to pay credit guarantee commission to the DICGC either at 3/4 % per annum or any enhanced rate as may be made applicable in future by the IDBI. Thus Clause 11 makes the agreement of loan in fact a tripartite agreement though the DICGC is not a party to the agreement of loan. It is common knowledge that a third party can be a beneficiary under an agreement.
25. Shri Rathnakar, the learned advocate for the APSFC cited the Andhra Pradesh High Court decision in CIT v. Chodavaram Co-operative Sugars Ltd. [1987] 163 ITR 420 for the proposition that a mere acknowledgement by the assessee that the guarantee commission is payable either to DICGC or to the loanee institutions is enough to establish that it is a trustee to those moneys collected towards the guarantee commission. Our attention was invited to the last two sentences at page 424 of the reported decision. Summing up the decision in Devatha Chandraiah & Sons' case (supra) their Lordships of the Andhra Pradesh High Court held as follows :
"That was a case where there was no statutory provision obliging the assessee to refund the money to the constituents from whom collections were made, pending final decision of the disputes. Even so, this court held that the acknowledgement of the assessee that the amounts collected were refundable clearly established the fact that the assessee was acting merely as a custodian or a trustee for the constituents from whom the moneys were collected and to whom the moneys are repayable, after the matter is finally concluded". In the case before us in the note filed before the Inspecting Assistant Commissioner dated 12-1-1988 the APSFC clearly undertook that the amounts collected towards guarantee commission were to be paid to the DICGC if a final decision is taken to be so. Otherwise if an option is given and the APSFC exercises the option and decides not to participate in the credit guarantee scheme, the amount is to be repaid to the loanee institutions. Further in ground No. 3 preferred before this Tribunal the APSFC clearly admitted that the guarantee commission collected had to be either paid to the DICGC or should be paid back to the loanee institutions from whom it is collected and thus it is merely an agent and this amount was collected only in a fiduciary capacity and as such it did not partake the character of income. Thus at more than one place the assessee had acknowledged itself to be merely an agent or a conduit pipe to pass all these moneys collected as guarantee commission either to DICGC or to the loanee institutions and it acted only as a trustee of those moneys collected.
26. It is next contended that merely because the assessee treated the amounts collected in a particular way it does not determine the real character of those moneys. Where at the time of receipt they cannot be considered to be trading receipt or income in the hands of the assessee, the moneys collected subsequently do not bear the character of income or trading receipts simply because the APSFC had treated it in its accounts as part of its trading receipts for some years. For this proposition reliance was placed on the following decisions :-
1. Andhra General Finance Corpn. 's case (supra)
2. Bengal & Assam Investors Ltd. 's case (supra) at 156
3. Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC) at 5 The first two decisions are already discussed in this order. In the third decision the Hon'ble Supreme Court held the following : "It is now well settled that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessee has earned any profit or suffered any loss. What is necessary to be considered is the true nature of the transaction and whether in fact it has resulted in profit or loss to the assessee".
27. Lastly the learned counsel Shri Rathnakar delat on the subject of burden of proof. He submitted that every receipt is not income and the burden to show that a receipt is income is always on the department and in support of this proposition he relied upon the decision of Supreme Court in Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532. He contended that the Revenue thoroughly failed in its duty to prove that the guarantee commission collected by the assessee is part of its trading receipts or partakes the character of income in its hands. He also argued that in fact no effort was made to show that the said receipt is part of the income of the APSFC.
28. The learned departmental representative merely relied upon the orders of the lower authorities and contended that it was the duty of the APSFC to pay the guarantee commission and so the question of the APSFC fulfilling the character of a trustee with regard to the amounts collected does not arise. He ultimately contended that the lower authorities are perfectly justified in treating the impugned amount as part of the income of the assessee and also in applying the ratio of the Supreme Court decision in Chowringhee Sales Bureau (P.) Ltd. 's case (supra) to the facts and decided the issue in favour of the Revenue.
29. Our discussion in the previous paragraphs would make us hold that the Supreme Court decision in Chowringhee Sales Bureau (P.) Ltd. 's case (supra) is not at all applicable to the facts of the present case and that each of the decisions cited on behalf of the APSFC would support its contention in one facet or the other. When the APSFC did not join the modified credit guarantee scheme introduced from 1-4-1981 we fail to understand why it was under a duty to pay the credit guarantee commission to the DICGC. On the last day of the previous year relevant to the assessment year 1985-86 the view is not clear. It is not known whether the APSFC is going to join the scheme or whether it had been given an option to get out of the scheme. In the meanwhile, however, in order to get refinance to the loans advanced by it the APSFC gave an undertaking, the text of which is already extracted above, saying that if it is compulsory for it to join the scheme it undertakes to pay the guarantee commission retrospectively from 1-4-1981 Therefore, we hold that as the matter stands on the last day of the previous year relevant to the assessment year 1985-86 the assessee is not under a legal obligation to pay the credit guarantee commission to the DICGC. In our opinion it held the amountssollected as guarantee commission only as a trustee since it was under a duty to either pay to the DICGC or to return it to the loanee concerns. Therefore, in our considered opinion the amount of credit guarantee commission collected by the assessee does not partake the character of trading receipts or income in the hands of the assessee. Its character always remains as credit guarantee commission and simply because in certain previous years the assessee returned it as part of its income as per its accounts, the amount does not belong to the assessee or the character of the receipt changes. We further hold that the assessee is only a trustee with regard to the amount collected as guarantee commission. The assessee was undera duty to pay the same to the DICGC or to return the same to the loanee institutions. In those circumstances we are of the opinion that the lower authorities went wrong in treating it as part of the income in the hands of the assessee. We, therefore, delete the amount of Rs. 89,60,696 from the computed income in the hands of APSFC.
30. Though there is another ground with regard to the levy of interest under Sections 139(8) and 215 raised in the grounds of appeal before this Tribunal, both sides agreed that it would go consequential with the primary ground already decided against the Revenue and in favour of the assessee. Therefore since the primary ground is decided, this ground no longer survives for consideration.
31. In the result the appeal filed by the Andhra Pradesh State Financial Corporation is allowed.