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TMI Blog2013 (10) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission of Income tax [1997 (4) TMI 5 - SUPREME Court] it has been held that where the company undertakes to pay more amount than what it has borrowed, and liability to pay the excess amount undertaken to be paid by the company to fulfil its needs for borrowed money is an allowable expenditure under section 37 of the Income Tax Act – Decided accordingly. Allowability of deduction u/s 35D of the Income Tax Act – Held that:- Since last several years, the Assessing Officer granted such claim on the same consideration, therefore, such claim could not have been suddenly disallowed - Income-tax Act recognizes the principle of consistency – Decided against the Revenue. - TAX APPEAL NO. 513 of 2012 - - - Dated:- 12-3-2013 - AKIL KURESHI AN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of Rs.74,23,000/-claimed by the assessee u/s.35D of the I. T. Act on the ground that such claim was not disallowed in earlier years and thereby allowing to perpetuate an error on the face of very clear and undisputed provision of law ?" IV. "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the disallowance made on account of depreciation of Rs.14,91,87,864/- claimed on certain assets since the said transactions are mere a financial arrangements and that the assessee is not engaged in leasing business ? V. "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in law in ignoring the fact that the assessee is not the owner of the assets and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. " 2.1 This question is accordingly answered and requires no further consideration. 3. Question No. II, which was raised in case of this very assessee in Tax Appeal No. 516/2012 by the Revenue, has been dealt with by this Court, thus- "3. With respect to Question [II], we noticed that the assessee had paid premium of Rs. 23.80 lakhs on redemption of debentures. The Tribunal accepted assessee's claim of deduction on such amount. Assessee had contended that such deductions would be available under Section 36 [1](iii) of the Income-tax Act, 1961, or alternatively under Section 37 [1] of the Act. Such premium which was otherwise spread-over a period of 5 years and was amortized over such period, is proportionately claimed in the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business. On a reference, the High Court noted that out of the total discount of Rs.3,00,000 an amount of Rs.12,500 had been allowed which the Department had not challenged. Hence, the High Court was concerned only with the balance amount of Rs.2,87,500 which the High Court held, could not be considered as expenditure. On appeal appeal to the Supreme Court, the Supreme Court held that the liability to pay the discounted amount over and above the amount received for the debentures was a liability incurred by the company for the purposes of business in order to generate funds of its business. It was therefore revenue expenditure. 5. Thus, according, to the law laid down by the Supreme Court, where the company undertakes to pay more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer to a decision of this Court in case of Saurashtra Cement Chemical Industries Ltd. v. Commissioner of Income-tax, Gujarat, reported in [(1980) 123 ITR 669], wherein, in the context of successive claim of tax holiday, the Court held that the ITO was not justified in refusing to continue the benefit of such tax holiday granted to the assessee in the earlier years, without disturbing the relief granted for the initial years. We are conscious that the issue is not identical in nature. However, the Income-tax Act recognizes the principle of consistency. In the present case, for as many as seven years, previously the Assessing Officer did not dispute certain claims and therefore, the Tribunal correctly interpreted that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not interested in the assets and therefore, it cannot be said as full payout lease. Therefore, in the circumstances and facts of the case, the arguments made by the learned DR cannot be accepted and following the rule of consistency, the assessee deserves to be allowed the claim and we direct the AO accordingly to allow the claim of the assessee. The order of the learned CIT(A) is reserved. Thus, Ground No.12 of the assessee's appeal is allowed. 7.1 From the above, we noticed that one of the prime factors which weighed with the Tribunal was the rule of consistency. Learned counsel for the assessee rightly pointed out that such claim did not arise for consideration for the first time, but, is spread over to the entire period between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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