TMI Blog2014 (7) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... anged between the parties there is an explicit agreement for not charging liquidated damages and interest which amounts to changing the terms of agreement in which event the interest component on the assumed liquidated damages cannot be added - the interest component of liquidated damages did not accrue to the assessee in the year and the AO is directed to delete the addition – Decided in favour of Assessee. - ITA No. 6535 & 6536/Mum/2012 - - - Dated:- 17-6-2014 - Shri D. Manmohan And Shri N. K. Billaiya,JJ. For the Appellant : Shri Subodh Ratnaparakhi For the Respondent : Shri R. K. Sahu ORDER Per D. Manmohan, V.P. These two appeals are filed at the instance of the assessee and they pertain to A.Y. 2003- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire principal amount it did not pay the interest amount as per the stipulated terms. Even after consistent follow up nothing could be recovered and it was doubtful of recovery. Therefore it was considered prudent not to charge liquidated damages over and above the interest amount outstanding. It is also contended that no prudent man would think of recovering liquidated damages when interest amount outstanding is in itself doubtful of recovery. It was also argued that on real income principle notional income cannot be brought to tax and by mutual consent the assessee had decided not to charge liquidated damages. The Commissioner, however, was of the view that this issue required detailed examination by the AO and therefore set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal during the quantum proceedings and contended that the assessee has not completely stopped charging the interest; it was reduced to 18%. When pointed out that in connection with liquidated damages there is mutual agreement not to collect liquidated damages and interest at 48% thereon, the learned D.R. merely relied upon the order passed by the AO. 7. Having regard to the circumstances of the case and in the light of the decision of the ITAT (supra) we are of the view that it is not a fit case for levy of penalty under section 271(1)(c) of the Act since the addition made in the quantum proceedings has been deleted by the Tribunal. We hold accordingly and allow the appeal filed by the assessee. 8. ITA No. 6536/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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