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TMI Blog2022 (12) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... nly upon maturity. Decided against the revenue. - ITA No. 5312/Del/2019 - - - Dated:- 28-7-2022 - SHRI SHAMIM YAHAYA, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER APPELLANT BY : SHRILAXMI NARAYAN AGGARWAL RESPONDENT BY : MS.YAGYASAINIKAKKAR ORDER PER N.K. CHOUDHRY, J.M. This appeal has been preferred by the assessee against the order dated 19.03.2019, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-2, New Delhi (in short Ld. Commissioner ) u/s. 250 of the Income-Tax Act, 1961 (in short the Act ) for the assessment year 2015-16 2. Brief facts, relevant for adjudication of the instant appeal, are that the assessee by filing its return of income on 23.09.2015 had declared an income of Rs.9,23,550/- under normal provisions of the Act and deemed income of Rs.9,24,547/- u/s. 115JB of the Act, which was selected for scrutiny through CASS and resulted into issuance of statutory notices u/s. 143(2) and 142(1) of the Act. The Assessing Officer observed in the assessment proceedings that the assessee during the F.Y. 2012-13 has issued 750 non-convertible debentures of face value of Rs.10 lacs each aggregating to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of CIT vs. Indian Rayon Industries Ltd. 236 CTR (Bom) 279 to justify the allowability of the premium payable on redemption of debentures. 2.2 The Assessing Officer after duly considering the submissions of the assessee and also the judgments referred, came to the conclusion that the facts of the cases are totally opposite to the facts of the Assessee s present case. In the cases referred by the assessee, the concerned assessee had issued debentures at a discount and claimed the discount expenses on a proportionate basis over the life of debentures to be redeemed and it was held to be an allowable expenditure on proportionate basis by the Hon ble Supreme Court whereas in the present case, the assessee had issued debentures redeemable on premium, payment of which at the end of the term which is fixed for non-convertible debentures and upon which the debentures are to be redeemed is the flip side of a situation to a case where the assessee issues debentures at a discount. In a case of a discount, the assessee has the benefit of the funds which are realized from the issue of the debenture, over the term of the debentures. In the case of the premium, which the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant had issued 750 non-convertible debentures at Rs. 10,00,000/- each totalling Rs. 75 cr redeemable after five years at the premium of Rs. 7,23,870/- per debenture. In F.Y., 2013-14, appellant issued 860 non- convertible debentures at Rs. 10,00,000/- each totalling Rs. 86 cr redeemable after five years at the premium of Rs. 10,77,342/-per debenture. 6.3 The AO treated it as a future expenditure provisional in nature and not allowable. The AO also distinguished the case laws cited by the appellant viz. Madras Industrial Investment Corporation Vs CIT 225 ITR 802 (SC) CIT Vs Indian Rayon Industries Ltd. 236 CTR 279 (Bom.). The addition was made by the AO relying on the case of CIT Vs Raymond Ltd. ITA 188/2011 (Bom.) holding that- The principle which has been laid down by the Supreme Court in Madras Industrial Investment Corporation additional liability equivalent to discount represents revenue expenditure and same applies to premium which is paid at the time of redemption.... The actual premium paid upon redemption of debenture would have to be classified as revenue expenditure. 6.4 In appeal, the appellant has relied on the same case laws and has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of actual payment basis was the subject of discussion while deciding allowance of premium on redemption of debenture as revenue expenditure. However, ultimately, the ld. Commissioner while relying upon the judgment rendered in the case of CIT vs. Jagjeet Industries, 204 CTR 428 (Del), allowed the claim of the assessee by holding that the same issue has been decided in favour of the assessee allowing provisions for premium on debentures on pro-rata basis as accrued during the year. The ld. Commissioner further held that the decision of the jurisdictional Court on identical facts as that of the instant case is squarely applicable. 6.2 We observe that the issue under consideration has already been decided by the co-ordinate bench in Assessee s own case referred above by conducing as under: 6. After hearing both the parties and on perusal of the impugned orders, we find the only issue before us is, whether premium payable on redemption of debentures is allowable when which it is actually incurred in the year of redemption of the debentures or could be proportionately spread over the period prescribed for maturity of such debentures. This issue as noted by the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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