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2012 (9) TMI 550 - AT - Income TaxDisallowance of reversal of interest - Held that:- The assessee is a Government Company engaged in the business of providing long-term finance for Industrial projects. The assessee has followed a system of accounting in respect of penal interest on accrual basis and as and when it was charged from the customer the same was shown as income of the assessee. Subsequently, on settlement with the parties the penal interest is either waived or reduced - Since the Board had taken the decision during the current year, therefore the amount of previous year’s expense had been charged to P&L account in the current year. On that basis, the decision taken by the Board cannot be held as an unsubstantiated decision and the interest income which was taxed in the past by offering in the books of accounts forming part of the total income declared, however the same was a doubtful of recovery, therefore the assessee-company had justification to reverse that entry by charging the same in the P&L account - in favour of assessee. Addition on account of interest waived - CIT(A) deleted the addition - Held that:- Facts have revealed that the amount in question pertained to penal interest which stood allowed therefore, following the directions of the Tribunal, the CIT(A) has directed that the waiver of penal interest is allowable. This findings of the CIT(A) being inconsistent with the order of the Tribunal is hereby allowed - against revenue. Addition of interest amount reverse pertaining to the earlier year - CIT(A) deleted the addition - Held that:- CIT(A) has found that the assessee has wrongly computed the higher income than the actual receivable, therefore rectification was correctly made. In the absence of any contrary material, this finding of ld.CIT(A) is hereby confirmed - against revenue. Addition being the interest waived pertaining to the earlier year - CIT(A) deleted the addition - Held that:- Facts have revealed a finding was given that there was an overlapping between the waiver of the penal interest and the amount pertaining to preceding year but the exact position of overlapping of the amount has not been placed on record, therefore we refer this item of waiver of penal interest back to AO to verify the same - in favour of Revenue by way of remand. Addition being the amount of interest waived pertaining to the earlier year - CIT(A) deleted the addition - Held that:- As that the amount was waived in terms of the settlement with the customer no fallacy in the deletion made by ld.CIT(A) - against revenue.
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