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TMI Blog2020 (11) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... ule C as a liability - HELD THAT:- No provision can be made for ascertained liability and therefore, no provision has been made by the assessee for interest payable and therefore, waiver of interest by IREDA cannot be considered as withdrawal of provision and cannot be reduced from the book profit. As held that the contention of the assessee that a sum should be considered as waiver of interest and part of book profit as interest payable for pre commencement period, needs examination and therefore, the matter was remitted for adjudication in accordance with law. The aforesaid findings by all the authorities under the Act are based on meticulous appreciation of evidence on record and does not suffer from any perversity warranting interferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of generation of power. According to the assessee, it continuously ran into losses since its inception and borrowed an amount from Indian Renewable Energy Development Agency (IREDA). However, the assessee neither repaid the principle nor the interest. The total interest, which was payable in the Assessment Year 2007-08 was ₹ 3.59 Crores. For the year ending 31.03.2007, the assessee entered into One Time Settlement (OTS) with IREDA under which entire interest as well as a part of principle amount was also waived by the IREDA. The total amount of interest waived by the IREDA under the One Time Settlement for the year ending 31.03.2007 was ₹ 3,59,58,370/-. The assessee in the profit and loss account for the Assessment Year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds examination, therefore, the matter was remitted to the Assessing Officer. Accordingly, the appeal was partly allowed. In the aforesaid factual background, the assessee has filed this appeal. 4. Learned counsel for the assessee submitted that finding recorded by the tribunal that the assessee has been debiting interest payable to profit and loss account of it is erroneous. It is submitted that the assessee had not claimed any reduction towards interest and a sum of ₹ 1,08,58,828/- was actually debited to profit and loss account for the year ending 31.03.2002 i.e., Assessment Year 2002-03. However, in the computation of income filed with the return of income, the aforesaid amount was added back. It is further submitted that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.09.1987. 5. On the other hand, learned counsel for the revenue submitted that even though assessee has claimed that the entire amount was claimed as expenditure on accrual basis, however, no provision was created and therefore, no adjustment was made in view of Clause (c) to Explanation 1 to Section 115JB of the Act. It is also argued that unless Clause (c) is attracted, Clause (i) for reduction also cannot be applied. It is further submitted that the Assessing Officer, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have recorded findings of fact that the assessee has not created any provision as required under Clause (c) of Explanation 1 to Section 115JB of the Act and the same is not disputed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.--For the purposes of this section, book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub- section (2), as increased by-- (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure relatable to any income to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that profit and loss account of the assessee as on 31.03.2007, was prepared in accordance with the Companies Act, 1956 and the assessee showed the outstanding interest as credit to profit and loss account because of waiver of interest on account of One Time Settlement. It was further held that the outstanding interest amount was not shown as either as reserve or provision and it was shown as liability and even the corresponding debits in the earlier years were not added back. It has further been held that the assessee's contention may be correct that there are no profits chargeable to tax under Section 115JB of the Act but the conditions stipulated in the proviso were not fulfilled. The tribunal has held that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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