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TMI Blog2019 (8) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Assessee : None For the Revenue : Shri S.S. Rana, CIT(DR) ORDER PER ANADEE NATH MISSHRA, AM This appeal by Revenue is filed against the order of Learned Commissioner of Income Tax (Appeals)-39, New Delhi, [ Ld. CIT(A) , for short], dated 23.11.2016 for Assessment Year 2012-13. The grounds of appeal are as under: i. On the facts and in the circumstances of the case and law, the Ld. CIT(A) has erred in deleting the addition of ₹ 553,90,97,000/- on account of unpaid interest on the loan granted by the Government of India to the assessee company. The Ld. CIT(A) has relied upon the judgment of the ITAT in the case of DCIT, Circle -12(1) in ITA No. 4927/Delhi/2013, which is not acceptable on the merit and also from the perusal of the records, it is seen that the department for earlier years is also in appeal on the similar issue. (2) Return of income was filed by Assessee showing loss of ₹ 5,40,43,07,905/-. The Assessment Order dated 27.03.2015 was passed U/s 143(3) of Income Tax Act, 1961 ( IT Act , for short) wherein an addition of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. In the case of the assesses company. interest on borrowings from COI were not paid by it though the due amount was debited to the Profit Loss A/c. The provisions of section 43B(d) (e )were; conceived precisely for such situations where the assessee claims deductions on account of interest payments due towards Public Financial Institutions and Banks without actually paying the same. By narrowly construing the section so as to exclude the interest payments due on borrowings from the Govt., while disallowing similar accruals in respect of Institutions partly or fully funded by the Govt the intention of the legislature behind enacting the law 7 not being honored. In view of this, it is held that interest accruing on the Govt, borrowings but not actually paid before the date of filling of the return, shall be hit by the provisions of section 43B of the income-tax Act, 1961 and shall be disallowed. 4.3 Placing reliance on the aforesaid and further when during the relevant previous year no material changes have taken place .the facts and circumstances remaining unchanged the position of law also remaining unchanged besides the arguments of the assessee are als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallow deductions on account of interest due but not actually paid to any scheduled bank in additions to other public Financial Institutions and Corporations. In the case of the assessee company, interest on borrowings from GOI were not paid by it though the due amount was debited to the Profit Loss A/c. The provisions of section 43B(d) (e) were conceived precisely for such situations whether the assessee claims deductions on account of interest payments due towards Public Financial Institutions and Banks without actually paying the same. By narrowly construing the section so as to exclude the interest payments due on borrowings from the Govt., while disallowing similar accruals in respect of Institutions partly or fully funded by the Govt., the intention of the legislature behind enacting the law is not being honored. In view of this, it is held that interest accruing on the Govt, borrowings but not actually paid before the date of filling of the return, shall be hit by the provisions of section 43B of the income-tax Act, 1961 and shall be disallowed. 5.1 The reason adduced by the AO was that during the relevant previous year, no material changes have ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1267/Del/05 for lack of approval of the committee on Disputes [COD]. 4.3.2 It is also noted from the order of Ld CIT (A) for A.Y. 2003-04 dated 17.06.2015 that the department did not take further action for obtaining the COD approval and revive the appeal for the A.Y. 2001-02. In effect the decision of Ld. CIT (A) for A Y. 2001-02 was not contested further accepted by the department. This issue has also been dealt with by the ITAT Delhi in ITA No. 4927/ Del/2013 in Hindustan Fertilizers Corporation Ltd Vs DCIT Cir 12(1), New Delhi for AY 2005-06 wherein the disallowance of unpaid interest on borrowings from GOI made in the assessment has been deleted mentioning inter alia, 7. We have considered the rival submissions on this issue and have gone through the material available on record. A perusal of the assessment order reveals that the Assessing Officer had disallowed on amount of ₹ 8,90,58,45,000/- on account of interest on borrowings by observing that this amount was being disallowed keeping in view the treatment given to this interest in preceding assessment year 2004-05. He therefore, held that the interest claimed was the accrued interest and had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.11.2018 of Co-ordinate Bench of ITAT, Delhi is reproduced as under: 8. We have heard both the parties and perused the material available on record. From the perusal of the assessment order, it can be seen that regarding cessation of liability, the Assessing Officer has not gone into the details of waiver in respect of Government giving a particular waiver benefit to specific industry which is again coming under the purview of Government of India, Ministry of Chemical Fertilizers. The same was made for the purpose of reviving the industry. Thus, it can be seen that the assessee Company incurred a heavy loss and Government of India s policy reflected that the PSU will be given FCI Inter-corporate Loan which will be settled by the Government of India. The assessee at no point of time has claimed waiver of interest on GOI Loan, Guarantee Fee and commitment fee as its expenditure. In-fact, these were the Government Policies and will come under the purview of Section 2(XVIII) as grant in aid. The reliance of the Ld. DR on the Hon ble Delhi High Court s decision in case of Rollatainers Ltd. Vs. CIT (2011) 339 ITR 54(Delhi) does not apply in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest dues. Assessing Officer having invoked provisions of section 41(1), brought to tax amount of loan written off by banks and financial institutions. On second appeal, in respect of term loans, Tribunal concluded that these monies did not come in possession of assessee on account of any trading transaction; receipts were capital in nature, being loan payable over a period of time alongwith interest. Thus, waiver of said loans was not treated as income of assessee. However, waiver of loan taken in course of carrying on business was regarded as benefit in revenue field and, accordingly, addition made by Assessing Officer was confirmed. Assessee filed instant appeal challenging addition upheld by Tribunal. It was held that following order passed by Court in case of Logitronics (P.) Ltd. v. CIT [2011] 197 Taxman 394 / 9 taxmann.com 302 , impugned order of Tribunal did not require any interference. 2. Loqitronics (P.) Ltd. Vs CIT r20111 9 taxmann.com 302 (Delhi)/r20111 197 Taxman 394 (Delhi)/r20111 333 ITR 386 (Delhi)/r20111 240 CTR 20 (Delhi) (Copy Enclosed) Hon ble Delhi High Court held that taxability of waiver of loan by bank would depend u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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