9911796707
TMI Blog2024 (10) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of allowing deduction for the proportionate amount of redemption premium as interest during the relevant previous year, in our view, does not arise.- Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal by relying on the following case laws:- I. Jute Corporation of India Ltd Vs. CIT and Another (187 ITR 688) (SC) II. Ultratech Cement Ltd Vs. ACIT (408 ITR 500) (Bom HC) III. CIT Vs. Pruthvi Brokers & Shareholders Pvt. Ltd (349 ITR 336) (Bom HC) IV. Balmukund Acharya Vs. DCIT (176 Taxman 316) (Bom HC) V. Chicago Pneumatic India Ltd Vs. DCIT (15 SOT 252) (Mum Trib) 5. Further, the Ld. AR fairly admitted before us that in the subsequent assessment years i.e. AY. 2011-12 to AY. 2013-14, the assessee had made similar ground of appeal (additional ground of appeal); and this Tribunal was pleased to dismiss the same in assessee's own case (ITA. Nos. 5260 & 5764/Mum/2017, 5280 & 5940/Mum/2017 & 5823/Mum/2019 dated 18.10.2023). However, in the light of the aforesaid facts, the Ld. AR pleaded that compulsorily convertible debentures are in nature of debt and not equity and relied on the following case laws: - i. CWT Vs Spenser and Co. Ltd (88 ITR 429) (SC) ii. ACIT Vs. CAE Flight Training (India) Pvt. Ltd[IT(TP)A No. 2060/Bang/2016] iii. TE Connectivity Services India P. Ltd Vs. NFAC (145 taxmann.com 214) (Bang. Trib) iv. IMS Health Analytics Services Vs. DCIT (ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ABNL), the parent company of the Assessee, ultimately acquired the CCDs on 07/02/2014 from the then holders of CCDs namely L&T Fincorp Ltd., L&T Infrastructure Finance Co. Ltd. & Tata Capital Financial Services Ltd. 7.2. The contention of the Assessee is that on 28/02/2014, the terms of issue of Debentures were changed and the Debentures were converted from mandatorily convertible debentures to Optionally Convertible Debentures. The holder (i.e. ABNL) did not opt for conversion of debentures and therefore, the same were redeemed on 26/03/2014 for INR 380 Crore (including premium of 130 Crore). 7.3. Out of the total amount of premium of INR 130 Crore, in Assessment Year 2014-15 the Assessee claimed deduction for INR 54,59,43,438/- being premium pertaining to debentures proceeds utilised in business for the entire period of Assessment Year 2010- 11 to Assessment Year 2014-15. However, the Assessing Officer rejected the plea of full claim and allowed only pro-rata claim for Assessment Year 2014-15 of INR 12,15,52,414 vide order, dated 21/12/2017, passed under Section 143(3) of the Act. 7.4. Meanwhile, vide letter dated 27/02/2015, the Assessee also filed claim for deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The use of the words 'in any manner' in the definition of Interest under the Act, supports the case of the Assessee. Therefore, whether it is a case of discount or premium, it would still be allowable as interest expense so long as it is to compensate for use of money. (d) Discount or Premium on debentures has been held as an allowance expense by the Hon'ble Apex Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT (225 ITR 802). This was a case of 'Discount on issue of Debentures. Further, reliance was placed on the decision of Hon'ble Madras High Court in the case of CIT Vs. First Leasing Company of India Ltd (Tax Case Appeal No.209 of 2006 & 1099 of 2004 wherein it is held that there is no distinction between 'Premium' and 'Discount' and both of them are entitled to be spread over the period of debentures. In holding so, the Hon'ble High Court relied upon judgment of the Hon'ble Calcutta High Court in the case of National Engg. Industries Ltd. v. CIT The courts have held that premium on debentures is allowable over the period of debentures. Accordingly, the Assessee has made a claimed deduction for the proportionate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f debentures to be allowable under Section 36(1)(iii)/37 of the Act even though the same was debited to share premium reserve in the books of accounts. (g) Though the order for Assessment Year 2014-15 is under appeal before CIT(A), in order to protect the Appellant from double jeopardy, the Assessee has made an additional claim for pro-rata amount pertaining to the captioned year of INR 14,37,11,341/- vide letter, dated 27/02/2015. 7.9. Per contra, the Learned Departmental Representative placed reliance on the order passed by the CIT(A) and submitted that the expenditure was of capital nature. The CIT(A) had rightly observed that the claim has been made after the expiry of almost 4 years from the end of the relevant assessment year. The amount claimed as deduction by the Assessee did not enter the books of account of the Assessee for the relevant previous year either at the time of closure of books of account or at the time of filing return of income as at that point in time the issue payment of premium of redemption of shares was not there. Therefore, deduction for premium paid on redemption of debentures cannot be allowed to the Assessee as a deduction during the relevant pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds redemption or premium was made during the relevant previous year. Therefore, in our view, the Assessee could not be permitted to claim deduction either on accrual or paid basis during the relevant previous year. 7.13. On 28/02/2014, by way of mutual agreement between ABNL and the Assessee, OCDs came into existence for the first time. The issue redemption premium arose only when ABNL opted not to get shares and instead sought redemption of debentures, and thereafter, the OCDs were redeemed by the Assessee at a premium of INR 130 Crores on 26/03/2014. Since the OCDs were not in existence during the relevant previous year, the question of allowing deduction for the proportionate amount of redemption premium as interest during the relevant previous year, in our view, does not arise. 7.14. It has been contended on behalf of the Appellant that premium on redemption of debentures is recompense for the use of funds. It is a matter of the commercial arrangement whether the lender opts for recompense in the form of allotment of equity shares in case of CCDs or premium on redemption in case of OCDs. For the relevant previous year, the borrower had opted for recompense in the form of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the facts and circumstances of the present case, we are of the view that the commercial arrangement entered into by the Assessee subsequent to the filing of return of income for the relevant previous year, cannot be applied retroactively to make additional claim leading to reduction of the income returned by the Assessee. 7.16. Having perused the judicial precedents cited on behalf of the Assessee, we conclude that, in view of the above, none of the judicial precedents cited apply to the factual matrix before us and therefore, the same do not advance the case of the Assessee. 7.17. In view of the paragraph 7.10 to 7.16 above, we confirm the order passed by the CIT(A) rejecting the claim for deduction of INR 14,37,11,341/- in respect of proportionate premium on redemption of OCDs made by the Assessee during the assessment proceedings. Accordingly, Ground No. V raised by the Assessee is dismissed." 11. Since facts are identical and there is no change in law, respectfully following the decision in the assessee's own case for subsequent assessment years, we are inclined to dismiss this additional ground of appeal of the assessee. 12. In the result, the additional ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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