2016 (7) TMI 916

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....appeal have been raised. The first ground of appeal was with regard to addition of Rs. 6,63,48,983/-, towards interest waived by the financial institution and the second ground was to the addition of Rs. 1,98,92,271/-, being the principal amount waived by the financial institution. 3. As regards first ground of appeal, the Income Tax Appellate Tribunal has confirmed the findings of the Commissioner of Income Tax (Appeals), disallowing the above sum of Rs. 6,63,48,983/-, which was debited in the Profit & Loss Account in the assessment years 1994-95 to 2002-03 and the same was taken as income of the assessee. With regard to second ground of appeal, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and directed th....

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....e time settlement. He further submitted that the Tribunal ought to have appreciated that the assessee having not actually paid the interest, no deduction under Section 43B is warranted. 7. According to the Assistant Commissioner of Income-Tax, the assessee-company disallowed an expenditure of Rs. 6,63,48,983/-, under Section 43B of the Income-tax Act, 1961 (in short 'the Act') towards interest payable to financial institution which was return back. The above said amount of Rs. 6,63,48,983/-, relates to interest due to IDBI bank for the period relating to assessment years 2003-04 to 2005-06. IDBI bank has agreed to the proposal for payment of one-time  settlement and accordingly, waived the interest to an extent of Rs. 6,63,4....

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....ed the interest to the extent of Rs. 6,63,48,983/- under Section 43B of the Act, while computing the taxable income for the assessment years 2003-04 to 2005-06. In other words, the interest, which is otherwise to be allowable under mercantile system of accounting, was taken as income in view of Section 43B of the Act. During the year under consideration, the IDBI Bank waived the entire interest portion to the extent of Rs. 6,63,48,983/-. The assessee claimed this amount as deduction while computing the total income. The Assessing Officer disallowed the claim of the assessee on the ground that there was no actual payment of interest. However, the CIT(Appeals) found that the above sum of Rs. 6,63,48,983/-, which was debited in the Profit & Lo....