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Issues involved:
1. Deduction allowed u/s 115JB(2)(ii) 2. Allowance of deduction u/s 115JB(2)(iii) Deduction allowed u/s 115JB(2)(ii): The appeal by the Revenue challenged the deduction allowed under section 115JB(2)(ii) of an amount of Rs. 90.89 crores for the assessment year 2005-06. The AO did not dispute that banks and financial institutions waived interest amounting to Rs. 115,07,00,000/- as a one-time settlement, with the assessee crediting the waived amount in its P & L account. However, the AO allowed a differential amount of Rs. 5,29,41,000/- as deduction u/s 115JB(i)(ix) as it was paid in earlier years. The CIT (A) found the AO's conclusion factually incorrect, determining that the interest disallowed under section 43B assumes the character of provision and cannot be treated as "paid." The CIT (A) quantified the deduction under section 115JB(2)(i) at Rs. 90,89,79,596/-, following a precedent set by the ITAT, Bombay Bench. The Tribunal upheld the CIT (A)'s decision, rejecting the Revenue's ground. Allowance of deduction u/s 115JB(2)(iii): The second ground related to the allowance of deduction u/s 115JB(2)(iii) of an amount of Rs. 42.48 crores. Initially, the AO allowed Rs. 7,24,93,410/- as deduction under Explanation-III to section 115JB(2) based on unabsorbed depreciation and business loss. However, in appeal proceedings, the AO re-worked the brought forward loss and unabsorbed depreciation, resulting in unabsorbed depreciation of Rs. 28.67 crores being the lesser amount. As per section 115JB(2), the lesser amount between brought forward loss and unabsorbed depreciation should be allowed as deduction, thus the Tribunal modified the CIT (A)'s order accordingly. Consequently, this ground was allowed in favor of the Revenue, and the appeal was partly allowed. *Order pronounced on 04-5-2012.*
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