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TMI Blog2021 (1) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ucting the TDS as provided under Chapter XVII, B- Deduction at source of the Act will not be attracted. Hence, if the contention of the learned AR is believed to be true then the question of TDS does not arise. There is no question for deducting the TDS on the interest expenses on the deep discount bond as alleged by the AO for the simple reason that the assessee has not claimed any interest expense. Hence the ground of appeal of the Revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... question of deducting TDS in the situation wherein the assessee has not claimed any expenditure on such deep discount bonds. 3.2 The Revenue carried the matter to the Tribunal which was pleased to delete the demand raised by the AO in ITA No. 2216/AHD/2013 for the year under consideration vide order dated 6th December 2016 on a different reasoning altogether. It was held by the Tribunal that once the payee i.e. HDFC Bank has paid taxes on the income received from the assessee with respect to the deep discount bonds in question, the issue of raising the demand of TDS in the hands of the assessee does not arise under Section 201(1) of the Act in view of the judgment of Hon'ble Supreme Court in the case of Hindustan Coca-Cola Beverage Private Ltd. reported in 293 ITR 226. 3.3 However, the Revenue carried the matter to the Hon'ble Gujarat High Court in tax appeal No. 581 of 2017 on the following question of law: "Whether the appellate Tribunal has erred in law and on facts in deleting the interest levied under Section 201(1A) of the Act" 3.4 The above question of law was admitted by the Hon'ble Gujarat High Court and the matter was remanded back to the Tribunal for fresh adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant that the bonds and debentures are two different and distinguished financial instruments and return other securities is used for the term securities similar to the benches. b. The CIT(A) held that redemption and repurchase are different. The CIT(A) also held that interest payment made to HDFC bank on repurchase of DDBs comes within purview of section 194A and not section 193 of the I.T. Act and accordingly deleted the demand raised. 3. Thereafter, the Department filed appeal before the Hon'bte ITAT. The Departmental appeal was dismissed by order dated 06.12.2016. The Department however filed appeal before the Hon'ble Gujarat High Court. The Hon'ble Gujarat High Court by their order dated 25.04.2018 remanded the matter back to the Hon'ble Tribunal with specific directions-to examine three issues. 4. The hearing took place on 19.09.2019. During the course of hearing, the Ld. AR raised a fresh issue stating that the assessee company has neither made provision nor paid any amount to the HDFC Bank during the year under consideration, hence, there is no issue of non deduction of interest u/s 201(1) and 201 (A). Since the new issue was raised for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee itself submitted copy of interest account of HDFC bank limited in their paper book page number (39 & 74-76) which shows that the HDFC bank received interest on DDBs from the assessee company. As such, the contention of the assessee proves wrong and misleading. It is pertinent to mention that both Assessee Company and HDFC Bank Ltd are listed companies following mercantile system of accounting. Therefore, it is impossible that one company receives the income without being paid by another. In view of the above, it is contended that the assessee was liable to deduct tax at source from interest paid on repurchase of DDBs from HDFC bank Ltd. u/s 193 of the IT Act. The AO has correctly charged interest u/s.201(1) and 201(1A) of the IT Act by passing order dated 13.06.2013. 5. On the other hand, the learned AR before us filed a paper book running from pages 1 to 122 and contended that the assessee in the year under consideration has not claimed any interest expenses on such deep discount bonds. Therefore the question of deducting the TDS does not arise. Hence the assessee cannot be treated as assessee default on account of non-deduction of TDS under the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been challenged by the Revenue.
7.2 The ld. AR has also filed the breakup of interest expenses in support of his contention that the assessee has not claimed any interest expense which is detailed below:
Nirma Limited Schedule 18 of profit and loss account Details of Interest expense
Asst. Year 2007-08 Acct. Year 2006-07
Particulars
Amount
Interest on Non Convertible debentures
4,24,43,590
Interest on Inter Corporate Deposit
1,62,01,399
Other Interest
5,87,14,223
Bank Interest
3,05,52,706
Interest on packing credit in foreign currency
6,63,981
Bank Commission
2,90,45,432
Foreign bank Charges
48,546
Bank L.C. Charges
30,814
Total
17,77,00,690
7.3 At the time of hearing, the DR has also not controverted the arguments of the ld. AR for the assessee. Accordingly we hold that there is no question for deducting the TDS on the interest expenses on the deep discount bond as alleged by the AO for the simple reason that the assessee has not claimed any interest expense. Hence the ground of appeal of the Revenue is dismissed.
8. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the Court on 04 /01/2021 at Ahmedabad. X X X X Extracts X X X X X X X X Extracts X X X X
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