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2021 (8) TMI 1132 - AT - Income TaxAddition of interest on overdue deposits - ascertained liability or not - Additions made in the rectification proceedings u/s 154 - CIT(A) deleted the addition made in rectification on the ground that addition made under normal provisions was also deleted by the Learned CIT(A) in appeal against order u/s 143 (3) by the assessee holding that liability is ascertained liability - HELD THAT - We find that in assessment year 2009-10 the matter was restored by the Tribunal to the file of the Assessing Officer. Assessing Officer in his order passed in compliance to the order of the Tribunal, has allowed the claim of the assessee of interest on overdue deposits. In the circumstances, when the Assessing Officer himself has accepted the claim of the assessee in assessment year 2009-10, then action of the assessing officer in rectifying the assessment order and making addition on the same ground in assessment year 2013-14 i.e. present assessment year, is not justified. We accordingly, uphold the order of the Learned CIT(A) on the issue in dispute. The ground of the appeal raised by the Revenue is dismissed.
Issues Involved:
1. Deletion of addition of ?18,00,00,000/- by the CIT(A) related to interest on overdue deposits. 2. Justification of rectification under section 154 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?18,00,00,000/- by the CIT(A) Related to Interest on Overdue Deposits: The Revenue challenged the deletion of the addition of ?18,00,00,000/- by the CIT(A), arguing that the liability was unascertained and only a provision was made. The assessee, a nationalized bank, had included this amount as an allowable deduction as per an RBI circular. The CIT(A) had previously deleted this addition, considering it a definite and ascertained liability, following similar decisions for assessment years 2009-10, 2010-11, and 2011-12. The Tribunal noted that the CIT(A) had deleted the addition based on the consistent accounting treatment of interest on overdue deposits by the bank, as per the RBI circular. The Tribunal referenced the CIT(A)'s detailed findings and previous decisions which established that the liability was definite, as per the RBI circular, and thus allowable under the Income-tax Act. The Tribunal upheld the CIT(A)'s order, emphasizing that the issue had been resolved in favor of the assessee in earlier years and the Assessing Officer had accepted this in the reassessment for 2009-10. 2. Justification of Rectification Under Section 154 of the Income-tax Act, 1961: The Revenue's appeal also involved the rectification order under section 154, where the Assessing Officer added ?18,00,00,000/- to the book profit, arguing it was an unascertained liability. The CIT(A) had deleted this addition as well, stating there was no apparent mistake in the original assessment order to justify rectification. The Tribunal found that the rectification was not justified since the CIT(A) had already determined the liability as definite and ascertained in prior appeals. Moreover, the Assessing Officer had accepted the assessee's claim in the reassessment for 2009-10. Therefore, the Tribunal concluded that the action of the Assessing Officer in rectifying the assessment order for 2013-14 was not justified and upheld the CIT(A)'s deletion of the addition. Conclusion: The Tribunal dismissed the appeal of the Revenue, affirming the CIT(A)'s decision to delete the addition of ?18,00,00,000/- related to interest on overdue deposits. The Tribunal held that the liability was definite and ascertained, following the RBI circular and consistent accounting policy. The Tribunal also found that the rectification under section 154 was not warranted as there was no apparent mistake in the original assessment order.
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