Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (9) TMI 485 - ITAT KOLKATAAddition u/s 43B - Conversion of interest payable in equity shares - interest was neither paid during the financial year nor within the due date - CIT(A) deleted the addition - Held that:- As decided in CIT v. Reinz Talbros Pvt. Ltd [2001 (3) TMI 26 - DELHI HIGH COURT] the liability was discharged by way of issuance of shares & when the assessee issues shares the assessee does not incur any expenditure as the assessee is not to make any payment legally towards shares issued. The shares cannot be equated with debentures, which is purely by way of loan and the same are required to be repaid on maturity. However, in respect of shares the company is under no obligation to make any payment in respect of such shares where share holders accept payment of pro rata dividend when such dividend is declared. Thus by issuance of shares the assessee cannot be said to have incurred any expenditure and hence issuance of shares in lieu of interest liability cannot be considered to have been payment towards expenditure. Accordingly the interest liability discharged is not an allowable expenditure. As liability can be discharged in a number of ways, it does emphasize the fundamental principle that unless 'actual payment' is made, the restriction placed in section 43B will hold good and deduction cannot be allowed. In view of these discussions, as also bearing in mind entirety of the case, the grievance of the Assessing Officer is upheld and restore the disallowance of ₹ 68,18,318/- - against assessee.
|