9911796707
TMI Blog2021 (10) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... on equipments and pump sets had filed its return of income for A.Y 2010-11 on 29.09.2010, declaring a loss of (-) Rs. 1,46,11,516/-(including unabsorbed depreciation of Rs. 7,29,864/-). The return of income filed by the assessee company was initially processed as such u/s 143(1) of the Act. Original assessment was framed by the A.O vide his order passed u/s 143(3), dated 08.02.2013 determining the total income of the assessee company at (-) Rs. 1,44,83,023/-. Subsequently, the A.O holding a belief that the assessee's claim for deduction u/s 43B of interest payable to Gujarat Industrial Investment Corporation Ltd.(GIIC) of Rs. 3,23,84,509/- was wrongly allowed while framing the assessment u/s 143(3), dated 08.02.2013, reopened the case of the assessee u/s 147 of the Act. 3. During the course of the reassessment proceedings, it was observed by the A.O that the assessee company had obtained a "term loan" from Gujarat Industrial Investment Corporation Ltd. (GIIC) way back in the year 1973 for acquisition of new plant and machinery. Thereafter, as the assessee company in succeeding years had suffered losses and had become a sick company, it thus failed to repay the aforesaid loan. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtraordinary Items'. In its return of income for the year under consideration the Principal of Rs. 36,11,083/- waived under OTS was reduced by the assessee by claiming the same as a 'Capital receipt'. Also, the assessee in its computation of income had reduced from its income the amount of Interest of Rs. 3,23,84,509/- that was stated to have been suo motto disallowed u/s 43B over the years i.e A.Y 2002-03 to A.Y 2008-09. Rationale for reducing the aforesaid amount of interest of Rs. 3,23,84,509/-(supra) from its total income was explained by the assessee as under: "i. Out of the amount of Rs. 3,23,84,509/- disallowed u/s 43B in earlier years, an amount of Rs. 1,91,19,083/- 2as paid by the appellant to GIIC as a part of full and final payment of Rs. 2,35,00,000/- in OTS. The amount so paid was expressly deductible u/s 43B in the year of payment. ii. The appellant credited the full amount of interest waived as per books of accounts of Rs. 2,04,20,706/- in the P & L Account. Out of this the amount of Rs. 1,32,65,426/- [Rs. 3,23,84,509 (-) Rs. 1,91,19,083/-] was already disallowed u/s 43B in earlier years. It is settled principle under taxation that the credit back an expense not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable to GIIC that was credited by the assessee in its profit and loss account for the year under consideration. Also, the A.O was directed to verify as to whether or not the interest waived under OTS was included in the figure of 'Profit' as per Profit & loss account taken to the computation of income a/w the fact that as to whether or not the aforesaid interest payable to GIIC of Rs. 3,23,84,509/- (supra) was disallowed by the assessee in the earlier years u/s 43B of the Act. The A.O was directed by the CIT(A) that the assessee's claim for deduction of interest payable to GIIC that was waived under OTS was to be allowed to the extent the same cumulatively satisfied a set of two fold conditions, viz. (i). that the interest waived was credited in the profit & loss a/c of the assessee company for the year under consideration; and (ii). that such interest was disallowed by the assessee u/s 43B in the earlier years. Accordingly, the CIT(A) in terms of his aforesaid observations partly allowed the appeal of the assessee company. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a narrow compass i.e the entitlement of the assessee for claim of deduction of interest of Rs. 3,23,84,509/- (supra). On the one hand the assessee had claimed deduction of the entire amount of interest of Rs. 3,23,84,509/- (supra) that is stated to have been disallowed u/s 43B while computing the income of the respective preceding years; while for on the other hand the A.O being of the view that the aforesaid interest that was disallowed in the preceding years u/s 43B was not actually paid by the assesse during the year under consideration, thus, was not entitled for deduction as claimed by the assessee. On appeal, it was observed by the CIT(A), that to the extent the part of interest of Rs. 3,23,84,509/-(supra) that was disallowed u/s 43B in the earlier years had been credited by the assessee in its profit and loss account for the year under consideration, its claim for deduction of the same in its computation of income was in order. However, in all fairness the CIT(A) had directed the A.O to verify from the records and ascertain the correct amount that was credited on account of waiver of interest payable to GIIC in the Profit and loss account of the assessee for the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the said amount was already disallowed by the assessee u/s 43B in the earlier years and formed part of the amount of interest of Rs. 2,04,20,706/- that was waived under OTS and credited in its Profit & loss a/c for the year under consideration, then, the declining of the assessee's claim for deduction of the said amount in the computation of income would result to double taxation. In our considered view, once the aforesaid interest/any part of the same had been disallowed u/s 43B in the aforementioned preceding years, then, crediting of such interest/part thereof in a subsequent year in which the same had been waived under OTS would result to a double taxation of the said amount. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Madras in the case of CIT VS. M/s Samudra Shoe Overseas Ltd, TCA No. 349 of 2016, dated 06.06.2016. It was observed by the Hon'ble High Court that the interest payable by the assessee to the financial institution which was earlier disallowed u/s 43B of the Act was eligible as a deduction on the waiver of such interest by the bank in One Time Settlement (OTS). 10. Backed by the facts involved in the case before us, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
