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TMI Blog2012 (9) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... e same. Therefore, following the decision in the case of CIT vs. Shriram Pistons & Rings Ltd and vs. Vishnu Industrial Gases Pvt. Ltd., assessee is entitled to deduct this amount in computing the income. Decision is in favor of assessee. - I.T.A No. 3626/Del/10 - - - Dated:- 4-7-2012 - SHRI I.C. SUDHIR, AND SHRI K.G. BANSAL, JJ. Appellant by: Shri K. Sampath, Advocate Respondent by: Shri R.S. Negi, Sr. DR ORDER PER K.G. BANSAL, AM: The assessee has raised three grounds in this appeal, the sum and substance which is that the Ld. CIT(A) erred in not allowing the deduction of Rs. 28.48 lacs, being the interest paid to the bank for earlier years on crystallization of liability. 2. The brief facts are that assessee fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amount pertaining to earlier years has crystallized in this year. He will take a view in this matter after necessary verification. 2.1 The AO framed fresh assessment u/s 254 read with section 143(3) on 28.12.2007. In this assessment an addition of Rs. 28.48 lacs was made in respect of interest liability of earlier years with the bank, claimed by the assessee in this year. Essentially, the finding of the AO is that no evidence has been produced to show that the additional liability of interest arose in this year. For the sake of ready reference, his findings are reproduced below :- The assessee has not filed any bank statement regarding the amount of Rs. 28.48 lakhs as these are the expenses as differential interest to bank. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the expenses of earlier years had crystalised during the year. On the same date, voucher No. 885 was also given from the books of the assessee, vide Annexure-A1, A1 A3. On none of the same, it could be proved with any degree of certainty that the same pertained to Rs. 28.48 lakhs. While on the issue, it is mentioned that inspite of giving opportunity for more than a month and a half, no correspondence from UCO Bank was provided. Nor is there any crystal clear evidence that the management of the assessee had accepted the settlement during the year. 7. In view of the discussion above, I am constrained to observe that the assessee had failed dismally in proving that the expenses of earlier years had crystalised during the year, which wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts it has been argued that the debit by the bank in the account of the assessee shows that the liability arose in this year. The liability is revenue in nature and , therefore, it is rightly allowable in computing the income of the assessee for this year. 3.1 In reply, the Ld. Sr. DR submits that the only point to be seen in this case is whether the liability crystallized in this year or not. This assessment is being framed as per specific direction of the Tribunal to ascertain as to whether any amount of interest liability pertaining to earlier years has crystallized in this year. The fact of the matter is that no evidence of ascertainment has been placed on record and no evidence regarding settlement of dispute has been placed on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax for two years. Therefore, the question is only in respect of year of deduction and it is a pity that all of us have to expend so much time and energy only to determine the year of deduction. The question before the Hon ble Delhi High Court was also regarding the crystallization of liability i.e. as to whether it accrued on 31.3.1981 or 30.6.1981. On facts, the Hon ble Court mentioned that in so far as dealers of the assessee are concerned, they would not have acquired the right to get additional incentive in the sense that assessee would not have known till 30.6.91 how much incentive the dealers had earned. In so far as the dealers are concerned, their entitlement would be known only when the sales were actually ascertained and determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,60,81,666/- only in the books, resulting in the difference of Rs. 28,46,320/-, which has been claimed in this year. The debit balance as on 31.3.98 of the amount of Rs. 2,48,60,371/- does not in any manner explain the aforesaid difference. However, the fact remain that there was some dispute or at least misunderstanding in the mind of the assessee about method of accounting the interest i.e. whether it should be simple interest or compound interest. The difference for financial years 1995-96 and 1996-97 has been accounted for in this year. It appears that the aforesaid amount of Rs. 2,48,60,371/- may include this differential amount also . Even if it is not so, the assessee after seeking clarification from the bank, has debited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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