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2019 (6) TMI 1475 - ITAT HYDERABADBook profit determination as per the provisions of section 115JB - assessee has made provision of interest on delayed payment - Rectification of mistake u/s 154 - mistake as crept i.e., in the P & L account, an amount as debited towards provision for interest for delayed payments and the same was not added back for arriving book profit u/s 115JB - HELD THAT:- Provision of interest on delayed payment, which has two segments, first segment is the part of the provision, which assessee has negotiated and finalized the liability and other segment is part of the provision, for which assessee has determined the gross liability, which was not negotiated or finalized during this AY. Assessee follows this procedure regularly over the years. The gross liability of interest is adjusted in the subsequent year and the excess or short of liability are adjusted in the subsequent P&L A/c, which has an impact in the subsequent AY. Similarly, current AY also, assessee makes similar adjustments. Considering the method of accounting adopted by the assessee and also the submission of ld. DR, in our view, assessee should disclose the above transactions in the manner in which the correct book profit is determined as per the provisions of section 115JB. AO has only disallowed the ascertained liability without giving effect to the actual settlement of ascertained liability of earlier year. It will give clear and proper book profit. Hence, we direct the AO to follow the above direction and determine the actual book profit. Accordingly, ground raised by the revenue is allowed for statistical purposes.
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