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2011 (1) TMI 127 - AT - Income TaxDis allowance u/s 43B - Application of provisions of section 43B on income determined u/s 43BB - Rectification of mistake u/s 154 - interest u/s 220(2)- The principles established by the Hon’ble Calcutta High Court in CIT v. Schlumberger Sea Co. Inc. (1997 -TMI - 11561 - CALCUTTA High Court), eventhough directly not applicable, are still valid and in view of the same we are of the opinion that disallowance under section 43B are not warranted and that too under section 154 which is applicable only for rectifying the mistake apparent from record. This issue is a debatable one and there are conflicting judicial pronouncements for disallowance under various provisions of the Act. The Hon’ble Madras High Court held that artificial disallowance under section 40A(3) does not arise. The Hon’ble AP High Court, however, upheld the orders of disallowance while estimating net profit by rejecting the books of account. So this issue is a debatable one whether provisions of section 43B are applicable or not. We are of the opinion that this is a debatable issue which could not be undertaken in the proceedings under section 154. This is a debatable issue which could not be undertaken in the proceedings under section 154 Accordingly ground No. 1 of the assessee is allowed - Addition to be deleted. Regarding deletion of levy of interest under sections 234B, 234C & 234D - as the entire income was subjected to TDS assessee was not eligible to pay advance tax - the issue is in favour of the assessee by the judgment of the Hon’ble Bombay High Court in the case of M/s. NGC Network Asia LLC (2009 -TMI - 33839 - BOMBAY HIGH COURT) - Decided in favor of assessee - deletion of interest upheld.
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