TMI Blog2022 (7) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... er ITAT erred in holding that the appellant was not entitled to a deduction, in computing its business income under the Act, of the interest of Rs.3.7 crores paid by it to RBI - HELD THAT:- As decided in BANK OF BARODA [ 2011 (2) TMI 1609 - BOMBAY HIGH COURT] interest paid to the RBI was not penalty and accordingly the interest expenditure is allowable - thus the question framed will have to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss income under the Act, of the interest of Rs.3.7 crores paid by it to the Reserve Bank of India ( the RBI )? 4. The Appellant is a Scheduled Nationalised Bank. In the return of income for the assessment year 1990-91, the Appellant claimed the deduction of Rs.31164211 and Rs.6025430. The Appellant claimed these amounts in light of the interest charged by the Reserve Bank of India (RBI) under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .B.I. as could be seen from page 3 of CIT (A) s Order, would also show that it cannot, by any stretch of imagination be considered as a compensatory levy. The fact that the persons incharge and responsible for such an offence of non-maintenance of CRR ratio are liable to be punished, would also clearly go to prove that the interest charged u/s.42(3) was never intended to be compensatory in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue in this appeal is, whether the interest paid by the assessee for non-maintainance of the cash reserve ratio/statutory liquidity ratio as per Section 24 of the Banking Regulation Act, 1949 and Section 42 of the Reserve Bank of India Act, 1934 constitute penalty so as to disallow the interest claim. The Tribunal following the decision in the case of DCIT V/s. Dhanalakshmi Bank Ltd. (Cochin) r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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