2009 (11) TMI 37

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....USTICE GURDEV SINGH Present: Ms. Urvashi Dhugga, Advocate for the revenue. Adarsh Kumar Goel,J. 1. Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 18.1.1994 in ITA No.717/Chandi/1988, relating to assessment year 1985-86 :- "1. Whether on the facts and in the circums....

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.... reserve which falls short of admissible deduction under section 36(1) (viii) of the IT Act?" 2. The assessee is a Public Sector Undertaking and raised certain issues for the assessment year in question. The Assessing Officer rejected the view point of the assessee on the issue of claim of deduction for waiver of interest in favour of sister concerns. The Assessing officer also made additions o....

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....e ground that for the period to which waiver related, income had already been taxed, as mercantile system of accountancy had been employed. The CIT (A) followed the earlier orders which have not been annexed with the paper book. It appears that the basis for the decision of CIT(A) is that since interest was waived in the year in question, the assessee could claim deduction. Since the revenue has n....

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....see corporation was, however, entitled to a higher deduction under section 36(1) (viii) for which the reserve already created was not sufficient. The learned CIT(A) therefore directed the assessing officer to afford an opportunity to the assessee to create further reserve. It was further observed by him that a similar issue had been decided in favour of the assessee in the appeal for assessment ye....