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2020 (12) TMI 986 - AT - Income TaxDisallowance of expenditure of liquidated damages in relation to two parties, holding the same as penal in nature - CIT(A) has in principle agreed that expenses towards liquidated damages are not penal in nature and on production of confirmation from one party i.e. M/s IFFCL deleted the disallowance made by the Assessing Officer - HELD THAT:- CIT(A) in absence of reconciliation of amount of the liquidated damages claimed, has rejected the claim of the assessee, however, in our opinion, it is matter of verification from the third-party only and the interest of the justice, one more opportunity can be allowed to the assessee to produce confirmation of the liquidated damages charged by said company to the assessee. If the accounts of both the assessee and the said party can be reconciled, then matter ends and no disallowance would be required in the case of the assessee. Accordingly, we feel it appropriate to restore this issue back to the file of the CIT(A) with the direction to the assessee to produce document in support of its claim of liquidated damages including confirmation of ‘Chandrapura Thermal Power Station’ and copy of ledger account of the assessee in their books of accounts specifying money withheld in the form of liquidated charges. It is needless to mention that both the assessee and the Assessing Officer shall be provided adequate opportunity of being heard.
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