2014 (6) TMI 1062 - AT - Income Tax

Addition u/s 43B - interest payable, which was not paid during the year - interest payable to the Government of Tamilnadu and M/s Infrastructure Leasing and Financial Services - stand taken by the Revenue is that the interest to be paid by the assessee had not been crystallized in the year under consideration - HELD THAT - We find that the issue involved in this appeal has already been considered by the Tribunal in assessee s own case for the assessment year 2008-09 2012 (8) TMI 1202 - ITAT CHENNA admittedly, neither the Government of Tamil Nadu nor Infrastructure Leasing Financial Services Ltd. IL FS fall within the definition of Public Financial Institution. Hence, the learned Commissioner of Income Tax (Appeals) s premise that Explanation 3(c) of Section 43B(d) is applicable, is erroneous. As we have already held earlier that as per the reading of loan agreement, the interest amount has very much accrued and the liability has crystallized. In this view of the matter, we hold that order of the authorities below is liable to be set aside and assessee's claim be allowed DR could not controvert the above findings of the Tribunal and he could not bring any material on record to show that the above order of the Tribunal was varied in appeal by any higher forum. We, therefore, respectfully following the above quoted order of the Tribunal, confirm the order of the CIT(A) and dismiss the grounds of appeal of the Revenue.

Summary

Issues involved: Appeal against disallowance of interest and finance charges under section 43B(d) of the Income Tax Act for assessment years 2009-10 and 2010-11.

Analysis:
1. Facts of the Case: The assessee, an investment company in water-related projects, had a moratorium period for paying interest. The Assessing Officer disallowed a sum as interest payable under section 43B(d) of the Income Tax Act for not paying the interest during the financial year 2008-09.

2. Decision of CIT(A): The CIT(A), following the Tribunal's order in the assessee's own case for earlier years, allowed the appeal filed by the assessee against the disallowance of interest and finance charges.

3. Appeal Before Tribunal: The Revenue appealed before the Tribunal challenging the CIT(A)'s decision. The Tribunal considered the issue of interest crystallization and payment in detail based on previous judgments in the assessee's case for the assessment year 2008-09.

4. Tribunal's Analysis: The Tribunal referred to the loan agreement terms, emphasizing that interest accrual and postponement of payment were evident. It clarified the applicability of section 43B(d) and Explanation 3(c) regarding interest payable on loans from public financial institutions.

5. Confirmation of CIT(A)'s Order: The Tribunal confirmed the CIT(A)'s order, dismissing the Revenue's appeal for both assessment years 2009-10 and 2010-11. No distinguishable features were found in the previous Tribunal order, and the Revenue failed to provide any new material to challenge it.

6. Cross Objections: The Cross Objections filed by the assessee were in support of the CIT(A)'s order and were dismissed as the Tribunal upheld the CIT(A)'s decision.

7. Final Decision: Both the appeals filed by the Revenue and the Cross Objections filed by the assessee were dismissed, affirming the CIT(A)'s orders for the assessment years 2009-10 and 2010-11.

This detailed analysis of the legal judgment highlights the key arguments, interpretations of relevant sections of the Income Tax Act, and the Tribunal's decision based on precedent and factual considerations.