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2017 (10) TMI 372 - ITAT DELHIPenalty u/s. 271(1)(c) - addition on account of decapitalization of interest to assessee’s Orissa Project - Held that:- It is notable that the fact of amounts borrowed for Orissa Project, interest cost on such borrowed amounts, their partial utilization in the project and its partial deployment in investment, the interest earned thereon, setting off of this interest earned from the interest incurred on borrowed funds and capitalization of remaining amount of interest to the cost of Orissa Project, stand fully and truly disclosed before the Assessing Officer, as also reflected from the books of account of the assessee. The addition of interest earned amounting to ₹ 6,11,95,775/- was made by the AO treating the same as income from other sources. The contention of the assessee before the ld. CIT(A) was also that similar disallowances were also made by the AO in A. Yrs. 2006-07 and 2007-08 against the same loan and the CIT(A) in both the case had deleted the disallowance made by AO holding that interest received on the borrowed fund exclusively for the purpose of setting up of a unit at Orissa is not taxable as interest income. Nothing is addressed by the Revenue against this contention of the assessee. In presence of all these facts and the issue being debatable at various stages, we are of the opinion that it can hardly be said that the assessee had furnished inaccurate particulars of its income. Therefore, the penalty saddled against the assessee has rightly been deleted by the ld. CIT(A). - Decided in favour of assessee.
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