9911796707
TMI Blog2021 (9) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of manufacture of food items, bottling of beverages and drinking water. Assessee filed its return of income for A.Y. 2014-15 on 22.11.2014 declaring a loss of Rs. 5,71,06,719/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 28.11.2016 and the total loss was determined at Rs. 46,41,990/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 07.09.2017 (Appeal No.24/16-17) dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal before us and has raised the following grounds: i. "On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the ey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paid out of Cash credit limit (CC account) and therefore interest on pre-structured term loan should be treated as being actually paid. With respect to interest on CC limit, it was submitted that before restructuring of loans the limit was Rs. 20,00,00,000/- and on the date of restructuring an amount of Rs. 21,87,21,328/- was outstanding. It was submitted that after restructuring, out of the aforesaid amount, Rs. 12,25,00,000/- was converted into a fresh term loan and the balance Rs. 7,75,00,000/- be treated as amount withdrawn as per restructured CC limit. The assessee thereafter submitted that overdue interest at the time of restructuring works out to Rs. 1,87,21,328/- (21,87,21,328 - 20,00,00,000) which was paid subsequently before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis. He submitted that assessee had paid interest on term loans aggregating to Rs. 1,30,99,758/- from time to time on various dates and the details of which are listed at Page 92 of the paper book. He thereafter submitted that assessee had also paid interest on CC account and LC account which was debited on month on month basis by debiting to the Cash Credit account and the interest debited by the Bank was paid out of the amount deposited in the cash credit account arising out of the sale proceedings received by it. With respect to issue of restructuring of the bank loan, he submitted that the bank had reclassified the different loans under different heads and it was not a case of conversion of bank interest into a loan account but was a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Credit Account is run like a current account and the debit of amount from the Cash Credit Account towards the payment of Term Loan will result into actual payment of interest on Term Loan. He further submitted that according to the prudential norms issued by the RBI in the Master Circular a Term Loan or a Cash Credit is liable to be classified as Non Performing Assets when the interest is due for a period of more than 90 days. He submitted that in the case of assessee, as on 29.03.2014, the credit facility availed by the assessee was not classified as Non Performing Assets as no interest was outstanding as on 29.03.2014. He thereafter submitted that AO had relied on the decision of Hon'ble Delhi High Court in the case of MM Aqua Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redits in the CC Account are more than the amount of interest debited. He therefore submitted that no disallowance is called for under section 43B of the Act. 8. Learned DR on the other hand supported the order of lower authorities. 9. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to the disallowance made by the AO u/s 43B of the Act. Before us, it is the submission of the Ld AR that bank has charged interest on term loan on month to month basis and the same has been recovered by debiting it to the cash credit (CC) account of the assessee. The Ld AR has also contended that the amounts of credits (deposits) in the cash credit account are much more than the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich could be said to have been converted into any loan or advance as on the close of the previous year so as to be deemed not actually paid. The order of CIT(A) was held by Tribunal and upheld by Hon'ble Calcutta High Court. 12. We are of the view that the ratio of the aforesaid decisions are applicable to the facts of the present case. We further find that the decision of Hon'ble Delhi High Court in the case of MM Aqua Technologies Limited (supra) which was relied by the AO has been vs. CIT has been overruled by Hon'ble Apex Court. Considering the totalility of the aforesaid facts we are of the view that AO was not justified in disallowing the expenses u/s 43B of the Act. We therefore set aside the order of the AO on this issue. Thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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