TMI Blog2021 (10) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... s disallowed u/s 43B in the said earlier years, therefore, such sum so actually paid would be eligible as a deduction during the year under consideration u/s 43B. We concur with the view taken by the CIT(A) that if the said amount was disallowed u/s 43B in the earlier years and had been credited by the assessee company in its Profit and loss account for the year under consideration on account of waiver of interest income payable to GIIC, then, the claim of the assessee for deduction of such amount in its computation of income is in order. No infirmity in the view taken by the CIT(A) who had directed the A.O to carry out certain verifications, viz. (i). that the interest waived was credited in the profit loss a/c of the assessee company for the year under consideration; and (ii). that the interest waived had been included in the figure of Profit as per the profit loss a/c taken to the computation of income; and (iii). that such interest payable to GIIC was disallowed u/s 43B in the earlier years. Accordingly, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(A) we uphold his order in terms of our aforesaid observations. - ITA No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company as per the mercantile system of accounting in its books of accounts . However, as the aforesaid amount of interest was not actually paid by the assessee, therefore, it is stated to have while computing its income for the said respective years disallowed the same as per the mandate of Sec. 43B of the Act, as under : Sr. No. Assessment Year Amount (in Rs.) 1. 2002-03 26,83,113/- 2. 2003-04 31,72,781/- 3. 2004-05 33,06,524/- 4. 2005-06 44,36,520/- 5. 2006-07 52,46,185/- 6. 2007-08 62,03,613/- 7. 2008-09 73,35,773/- Total 3,23,84,509/- As per the records, the amount outstanding by the assessee company towards GIIC on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated to have been suo motto disallowed u/s 43B over the years i.e A.Y 2002-03 to A.Y 2008-09. Rationale for reducing the aforesaid amount of interest of ₹ 3,23,84,509/-(supra) from its total income was explained by the assessee as under: i. Out of the amount of ₹ 3,23,84,509/- disallowed u/s 43B in earlier years, an amount of ₹ 1,91,19,083/- 2as paid by the appellant to GIIC as a part of full and final payment of ₹ 2,35,00,000/- in OTS. The amount so paid was expressly deductible u/s 43B in the year of payment. ii. The appellant credited the full amount of interest waived as per books of accounts of ₹ 2,04,20,706/- in the P L Account. Out of this the amount of ₹ 1,32,65,426/- [₹ 3,23,84,509 (-) ₹ 1,91,19,083/-] was already disallowed u/s 43B in earlier years. It is settled principle under taxation that the credit back an expense not allowed in earlier is not taxable. This avoids double taxation of same amount. However, the A.O while framing the assessment rejected the assessee s claim for deduction of interest of ₹ 3,23,84,509/- (supra) while computing its income, for the following reasons: i. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit as per Profit loss account taken to the computation of income a/w the fact that as to whether or not the aforesaid interest payable to GIIC of ₹ 3,23,84,509/- (supra) was disallowed by the assessee in the earlier years u/s 43B of the Act. The A.O was directed by the CIT(A) that the assessee s claim for deduction of interest payable to GIIC that was waived under OTS was to be allowed to the extent the same cumulatively satisfied a set of two fold conditions, viz. (i). that the interest waived was credited in the profit loss a/c of the assessee company for the year under consideration; and (ii). that such interest was disallowed by the assessee u/s 43B in the earlier years. Accordingly, the CIT(A) in terms of his aforesaid observations partly allowed the appeal of the assessee company. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee relied on the orders of the CIT(A). 6. Per contra, the ld. Departmental Representative (for short D.R ) though did not seriously objected to the observations of the CIT(A), but at the same time relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire amount of interest of ₹ 3,23,84,509/- (supra) that is stated to have been disallowed u/s 43B while computing the income of the respective preceding years; while for on the other hand the A.O being of the view that the aforesaid interest that was disallowed in the preceding years u/s 43B was not actually paid by the assesse during the year under consideration, thus, was not entitled for deduction as claimed by the assessee. On appeal, it was observed by the CIT(A), that to the extent the part of interest of ₹ 3,23,84,509/-(supra) that was disallowed u/s 43B in the earlier years had been credited by the assessee in its profit and loss account for the year under consideration, its claim for deduction of the same in its computation of income was in order. However, in all fairness the CIT(A) had directed the A.O to verify from the records and ascertain the correct amount that was credited on account of waiver of interest payable to GIIC in the Profit and loss account of the assessee for the year under consideration; and also, whether the same had been included in the figure of Profit as per Profit and loss account taken to the computation of income a/w the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of interest of ₹ 2,04,20,706/- that was waived under OTS and credited in its Profit loss a/c for the year under consideration, then, the declining of the assessee s claim for deduction of the said amount in the computation of income would result to double taxation. In our considered view, once the aforesaid interest/any part of the same had been disallowed u/s 43B in the aforementioned preceding years, then, crediting of such interest/part thereof in a subsequent year in which the same had been waived under OTS would result to a double taxation of the said amount. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Madras in the case of CIT VS. M/s Samudra Shoe Overseas Ltd, TCA No. 349 of 2016, dated 06.06.2016. It was observed by the Hon ble High Court that the interest payable by the assessee to the financial institution which was earlier disallowed u/s 43B of the Act was eligible as a deduction on the waiver of such interest by the bank in One Time Settlement (OTS). 10. Backed by the facts involved in the case before us, we are of the considered view that as the assessee as per the terms and conditions of the OTS had during the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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