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TMI Blog2022 (8) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... oring the irrefutable evidence placed before it and consequently passed a perverse order on the facts and circumstance of the case? - HELD THAT:- Issuance of debentures is not in dispute. Deduction of TDS (Tax deducted at source) is also not in dispute. The Tribunal has rightly recorded the correct principle of law that premium paid on redemption of debenture is Revenue expenditure. By the second Addendum Agreement dated 12.11.2012, the HDFC's right to exercise the option of converting the debentures into preference shares has been restored in consonance with the original Agreement. The resultant position is, the HDFC, at its option, could cause the assessee to redeem all debentures on September 20, 2012. The CIT(A) has accepted asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of Rs.28,83,17,552/- being deduction claimed on interest/redemption premium on debentures on the facts and circumstances of the case. ii) Whether the Tribunal was justified in law in holding that the liability to pay interest/redemption premium of Rs.28,83,17,552/- has not crystallized during the year and consequently passed a perverse order on the facts and circumstances of the case. iii) Whether the Tribunal is justified in law in holding that the genuineness of the Transaction has not been proved beyond doubt without passing a speaking order and ignoring the irrefutable evidence placed before it and consequently passed a perverse order on the facts and circumstance of the case. iv) Whether the Tribunal was justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of Assessing Officer. Hence, this appeal. 4. Shri. A. Shankar submitted that: the appellant had entered into a Debenture Subscription Agreement dated 25.09.2009 with HDFC Asset Management Company Ltd., whereunder, HDFC had agreed to subscribe to optionally convertible debentures for a sum of Rs.62 Crores and the same were redeemable on 20.9.2012; the appellant had undertaken to redeem the debenture at a price, which would entitle HDFC to post tax IRR (internal rate of return) of 25%. In case, promoter's IPO (Initial public offer) was not completed by the debenture redemption date, then debentures were redeemable at pre-tax IRR of 18% on the subscription amount; the original agreement was modified under fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction for the A.Y 2010-11. As an after thought, revised returns have been filed and therefore, the Tribunal has rightly held that it is a make-believe story to claim deduction. He further submitted that the deduction proportionate to the amount of premium on redemption of shares, cannot be allowed as the liability had not crystallized. With these submissions, he prayed for dismissal of the appeal. 7. We have carefully considered rival contentions and perused the records. 8. Undisputed facts of the case are, on September 25, 2009, assessee has entered into a Debenture Subscription and Share Purchase Agreement. The relevant clause for the purpose of this case reads as follows: 5. Redemption and Put 5.1 Irrespective of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 and revised return on 29.09.2012. The second Addendum Agreement was executed on 12.11.2012, prior to filing the revised returns. Shri. Shankar has taken us through the statement at page 154 of the paper book and contended that TDS has been deducted during the A.Y. in question. 10. It is also not in dispute that 62 Lakh convertible Debentures with face value of Rs.100/- have been issued by the assessee in the name of HDFC as per Annexure-K series between September 25, 2009 and January 1, 2010. The Assessing Officer has held that the premium paid or payable on the redemption of Preference shares would be arising out of the reserves and surplus and would constitute Capital expenditure out of the accumulated surplus and therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2012, the HDFC's right to exercise the option of converting the debentures into preference shares has been restored in consonance with the original Agreement. The resultant position is, the HDFC, at its option, could cause the assessee to redeem all debentures on September 20, 2012. The CIT(A) has accepted assessee's explanation that it had quantified the premium as per the agreement dated 15.05.2010 spread over for three financial years. It is trite that a borrowing Company, which issues debentures incurs liability to pay larger amount than what it has borrowed. The assessee - Company has made provision for payment of premium and also paid TDS. The adverse finding recorded by the ITAT that the parties had changed the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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