The Tax Publishers2021 TaxPub(DT) 0271 (Bang-Trib) : (2021) 085 ITR (Trib) 0018



ITO v. HMT (International) Ltd.

I.T.A. Nos. 1099/Bang/2016, 2859/Bang/2017, 3347, 3348/Bang/2018, 2325 & 2289/Bang/2019

A.Ys. 2009-10 to 2012-13

2 December, 2020

Department by: Neera Malhotra, Departmental Representative

assessee by: Tanmajee Rajkumar, Advocate


Chandra Poojari (Accountant Member)

I.T.A. No.1099/Bang/2016.

This appeal is by the assessee directed against the order of Principal Commissioner passed under section 263 of the Income Tax Act, 1961 (hereafter called 'the Act'), dated 28-3-2016.

2.I.T.A. Nos. 3347 and 3348/Bang/2018, 2859/Bang/2017 and 2289/Bang/2019.

These four appeals are with regard to quantum additions for the assessment years 2010-11, 2012-13, 2009-10, 2011-12 respectively.

3.I.T.A. No. 2325 of 2019 is with regard to levy of penalty under section 271(1)(c) of the Act for the assessment year 2011-12.

4. Since the issue involved in all these appeals are common in nature, these appeals are heard and disposed of together for the sake of convenience.

5. The facts are that the appellant had signed a contract dated 22-6-1989 with M/s. Engineering Industry Commission (EIC), Ministry of Defence, Government of Ethiopia, for supply of machine and equipment and rendering technical services for a total value of Rs. 1911 lakhs. EIC was required to pay 75 per cent. of the value of contract in 12 equal half yearly instalments, along with 7 per cent. interest and 2.5 per cent. penal interest per annum for overdue payments. However, the appellant received only 25 per cent. of the value of supplies and EIC did not make the balance payment of 75 per cent., which became due from 20-2-1991 onwards. The appellant followed up the matter of recovery of outstanding dues, however it was not able to recover any amount. Finally, the appellant decided to write off the debts in its books of account and the same was done in the financial year 2002-03 and financial year 2003-04. As regards interest the same was accounted for in the books of account and offered to tax till financial year 1996-97. Thereafter, the appellant stopped offering the same as income, considering the fact that there was uncertainty surrounding its recovery. However, since the appellant was still pursuing the matter of recovery with Government of Ethiopia through Government of India, in its annual report, it kept on reflecting outstanding interest due from the EIC in the form of 'Notes forming parts of account', indicating that the amount relates to overdue interest due from February 1991, which has not been accounted for in the books of account. Such overdue interest for the year under consideration works out to Rs. 14,46,80,000, which is under dispute in the appeal under consideration.