TaxTMI 
TaxTMI 
2019 (6) TMI 1475
X X X X Extracts X X X X
X X X X Extracts X X X X
....il and Book profits u/s 115JB at Rs. 14,25,15,299/-Originally the assessment was completed u/s 143(3) by making an addition of Rs. 25,00,000/- towards non-maintenance of proper vouchers towards various expenditure and determined the total income at Nil after setting off brought forward losses of earlier years and book profit u/s 115JB at Rs. 14,25,15,299/-. The Assessing Officer observed that while arriving book profit u/s 115JB, a mistake was crept i.e., in the P & L account, an amount of Rs. 1,12,22,587/- was debited towards provision for interest for delayed payments and the same was not added back for arriving book profit u/s 115JB, which needs to be rectified u/s 154. Hence, the Assessing Officer issued a notice u/s 154 but there was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apparent mistake to rectify, since it is not a mistake apparent from records, was accepted. Even otherwise on merits also, from the details submitted by the appellant it is seen that the interest was already debited and created that not paid for earlier year as other income after calculation of book profit u/s 115JB. Since, it is already covered in profit as per section 115JB, so addition not warranted and therefore, the addition made by the Assessing Officer deleted." 6. Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal: "1. The CIT(A) erred in deleting the addition of 'provision for interest on delayed payments to suppliers' of Rs. 1,12,22,587/- under explanati....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the course of assessment proceedings (page No. 7 to 10 of this paper book). In Page No.10, in response to the A.O's request for submission of the details on "Interest-others", the assessee submitted the same as Annexure-2 in the said letter which shows the interest on the delayed payments to supplier for the F.Y. 2011-12. It is evident from this submission that where the interest on delayed payments is ascertained, the same is credited to the respective parties as done in the case of first 4 parties of the table in page No. 10:- Name of the vendor Interest Amt BASF INDIA LIMITED 28,007 DOW AGRO SCIENCES LLC 2,046,828 KRISHI RASA YAN EXPORTS PVT. LTD. 78,14,329 PARAS DYES & CHEMICHALS PVT. LTD. 73,303 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt are ascertained liabilities. Both put together, the total to the interest on delayed payments is Rs. 2,11,85,050 and out of this only the unascertained liability portion has been added to the book profit as required under 115JB of the Act. The assessee's explanation that there were subsequent negotiations with the suppliers and this amounts were not paid to them is yet another proof that the very provision is unascertained. Further, the parties shown in page 21 of the assessee's paper book dated 06.05.2019 only shows the break up of the provisions made during the year but in no way proves that interest is credited to the respective party account. Wherever the interest is credited to the respective party account as in the case of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on the order of CIT(A) and submitted that assessee is following this method of accounting over the years. He brought to our notice the three years details of provision of interest and settlement. He explained that assessee creates provision of interest on delayed payments to its suppliers. Assessee has a system of calculating interest due on party-wise, which is before negotiation with the respective parties but maintains all the relevant information of delayed payment party-wise. Assessee follows a system as per which, it negotiates with the suppliers and the issues which are settled before completion of financial statement, it is considered as ascertained liability and unnegotiated issues are carried forward to next year. This process ....