9911796707
TMI Blog2014 (7) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 2,40,400/-. The Commissioner of Income Tax called for the records and noticed that the assessee had advanced a loan of Rs. 6 crores to Enterprise Trading Company subject to certain terms of agreement. According to article 5.1.3 of the terms of agreement failure on the part of the borrower to repay the debts comprising of principal amount and interest, on due date, would amount to default in which event the borrower has to pay liquidated damage @48% per annum on the defaulting amount. Records show that though the principal amount was repaid by the borrower the assessee has not recovered any amount on account of alleged interest liability which works out to Rs. 1,33,07,817/-. Since the assessee was following mercantile system of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that the assessee having followed mercantile system of accounting, liquidated damages ought to have been booked in the hands of the assessee and therefore brought to tax an amount of Rs. 63,87,752/- and further levied penalty of Rs. 20,12,142/- on the ground that the assessee sought to evade tax on the aforementioned sum. 5. Penalty was affirmed by the learned CIT(A) and therefore the assessee is in appeal before the Tribunal. At the time of hearing the learned counsel for the assessee placed before us a copy of the order of ITAT "G" Bench, Mumbai in assessee's own case for A.Y. 2003-04 (ITA No. 4633/Mum/2011 dated 16.11.2012) to contend that the Tribunal had considered this issue in great detail in the quantum proceedings while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereon, accrues to assessee from year to year. 9. In this case also the learned counsel for the assessee placed reliance upon the order of the Tribunal to submit that even for A.Y. 2003-04 the Tribunal had taken a view that on account of the letters exchanged between the parties there is an explicit agreement for not charging liquidated damages and interest thereon which amounts to changing the terms of agreement prior to the end of the accounting year 1997-98 in which event the interest component on the assumed liquidated damages cannot be added in the subsequent years. 10. We have carefully considered the rival submissions and perused the record. We have already considered this issue in the penalty proceedings. For the reasons given ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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