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2015 (2) TMI 15 - HC - Income TaxAccrual of interest - Absence of interest for the proportionate period - AO was dissatisfied with its explanation that its borrower refused to pay any proportionate interest on the plea that the entire deposits had been recalled mid year. - Held that:- The CIT(Appeals) took into account not only the additional evidence (especially the letter which was doubted by the ITAT) but also the fact that the AO did not make any enquiry. Significantly, there was a remand directed by the CIT (Appeals) in the course of which apparently, the AO made no attempt to hold further enquiries. In the absence of any concrete material, and having regard to the circumstances that the assessee in fact maintained the mercantile system of account, the failure of the AO to exert himself and requisition the books of account and other material from the M/s. Escorts Ltd. if he felt that in fact such amounts were payable contractually or otherwise, in our opinion, could not have resulted in the addition which was ultimately directed. Having regard to these circumstances, this Court is of the opinion that the assessee, on the basis of the materials on record, was entitled to succeed on this question and the ITAT wrongly interfered with the CIT (Appeals)’s determination. Accordingly, the impugned order is set aside. - Decided in favour of assessee.
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