9911796707
TMI Blog2025 (1) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of Rs. 61.97 Lacs is not brought to tax, the same would never be brought to tax. Pertinently, the conversion of debentures into shares have happened for face value of debentures for Rs. 2000/- plus accumulated interest of Rs. 1500/- per debenture. The value of shares essentially has two components i.e., face value of debentures of Rs. 2000/- and other component is accumulated interest of Rs. 1500/- per debenture. The capital gains on sale of shares would naturally be computed in the year of sale by adopting cost of acquisition accordingly. Therefore, the plea that if the interest component is taxed in this year, the same would amount to double taxation, is fallacious and hence, not acceptable. The cost shall include both the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Income Tax Act, 1961 (the Act). 2.2 The learned Principal Commissioner of Income Tax ought to have appreciated that the Assessing Officer has passed the order after considering the detailed submissions submitted by the Appellant during the course of assessment proceedings. 2.3 The learned Principal Commissioner of Income Tax ought to have appreciated that the issue sought to be revised by him, is subject to more than one view and the Assessing Officer has taken one of the possible views. Accordingly, assumption of jurisdiction by the Commissioner of Income Tax under section 263 of the Act is erroneous. 2.4 The learned Principal Commissioner of Income Tax erred in assuming jurisdiction to revise the assessment order on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view in the matter. The Ld. AR also raised the issue of double taxation. The written submissions have also been filed vide letter dated 25-10-2024 which have duly been considered while adjudicating the appeal. The Ld. CIT-DR, on the other hand, supported the revisionary order and referred to various case laws. Having heard rival submissions and upon perusal of case record, our adjudication would be as under. Facts leading to Impugned Revision 3.1 The assessee being resident individual was director and one of the shareholder in an entity i.e., M/s AVR Swarna Mahal Jewellery Pvt. Ltd. (SMJPL). It transpired that SMJPL issued zero coupon debentures @Rs. 2000/- per debenture during financial year (FY) 2009-10 to 9 of its directors. The deben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were issued to the assessee. 3.3 The assessee submitted that equity shares were allotted in lieu of debentures along with amortization of discount on debentures which falls under the purview of Sec.47(x) and therefore, the same would not be regarded as transfer. The assessee also submitted that it followed cash system of accounting as per Sec. 145 to recognize interest income. The assessee did not receive any income on debenture investments. Since there was no receipt for the assessee, no income was offered during this year. The assessee also submitted that it grossed up TDS as deducted by SMJPL and claimed TDS credit to that extent. Accepting the plea of the assessee, Ld. AO accepted the returned income of the assessee ad chose not to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entures into shares up-to the date of conversion was not properly examined by Ld. AO. The claim was accepted without having a holistic approach to the issue on hand. Pertinently, in reassessment proceedings of some other directors, elaborate discussions were made and appropriate additions were made. The Ld. AO ought to have examined the provisions of Sec. 49(2A) r.w.s. 47(x) or 47(xa) and then explored the possibility of applying the provisions of Sec. 56(2)(id) r.w.s. 2(24)(iv) of the Act. The other directors who were subjected to scrutiny were assessed for proportionate accumulated interest accrued on the debentures and brought to tax. This was not done in assessee's case which makes the order erroneous. The accumulated interest was to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest (Rs.) 1. 02-09-2009 to 31-03-2010 14,27,637/- 2. 01-04-2010 to 31-03-2011 24,47,378/- 3. 01-04-2011 to 31-03-2012 24,47,378/- 4. 01-04-2012 to 30-09-2012 12,23,689/- Total 75,46,082/- From assessment order, it could be seen that the assessee has offered interest amount of Rs. 13.48 Lacs to tax which include interest for this year for Rs. 12.23 Lacs and grossed-up portion of TDS deducted by SMJPL against the same. It also emerges that the assessee has claimed TDS credit on entire amount of interest that has accrued up-to the date of conversion. It is very clear that the assessee has not offered the interest income of Rs. 61,97,169/- (Rs.75,46,082/- - Rs. 13,48,913/-) to tax on the ground that she is following cash sys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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