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Issues Involved:
1. Estimated addition on interest provision for the year. 2. Estimated addition on interest provision for the past years. 3. Treatment of interest income as "Income from other sources." Issue-wise Detailed Analysis: 1. Estimated Addition on Interest Provision for the Year: The primary issue was whether the CIT(A) erred in confirming the addition of Rs. 17,44,486 made by the AO. The AO disallowed 5% of the interest provision on scooter-booking advances, amounting to Rs. 3,48,98,723, citing that the interest provision included amounts for bookings that had matured and were not claimed. The CIT(A) upheld this disallowance, reasoning that the provision for interest was for liabilities that did not exist or could not be quantified during the year. The assessee argued that the provision was made based on a consistent accounting method accepted in previous years and that cancellations were accounted for by writing back the interest. The Tribunal found that the AO's disallowance was based on conjectures and surmises, noting that the AO could not provide instances where interest was not paid due to late delivery. The Tribunal reversed the CIT(A)'s order, allowing the assessee's appeal on this ground. 2. Estimated Addition on Interest Provision for the Past Years: The second issue was the addition of Rs. 33,91,281, which the AO included in the current year's income, assuming it was a provision for interest no longer required due to deemed cancellations of bookings. The CIT(A) restored the matter to the AO for fresh consideration. The Tribunal agreed with the assessee that the CIT(A) had no justification to restore the matter, as the AO's addition was based on assumptions without concrete evidence. The Tribunal allowed the assessee's appeal, rejecting the addition. 3. Treatment of Interest Income as "Income from Other Sources": The third issue was whether the interest income of Rs. 3,63,86,316 should be treated as "Income from other sources" or as "Income from business." The AO and CIT(A) treated it as "Income from other sources," while the assessee argued it was from a business activity of lending money. The Tribunal examined the details and found that the deposits were large, infrequent transactions, not indicative of a moneylending business. The Tribunal held that the interest income was not from a separate business activity nor incidental to the assessee's main business of manufacturing scooters. The Tribunal rejected the assessee's appeal on this ground. Conclusion: The Tribunal allowed the appeal partially, reversing the CIT(A)'s orders on the first two issues and upholding the CIT(A)'s decision on the third issue.
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