9911796707
TMI Blog2025 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... re barred by limitation by 89 days. The assessee has filed a petition requesting the bench to condone the delay. It is stated therein that the employee of the assessee, who was handling the taxation matters at that point of time, was under the impression that the appeals has been allowed by Ld CIT(A). Since the revenue challenged the orders passed by Ld CIT(A), the assessee approached the tax consultant and then it was noticed that the legal grounds raised before Ld CIT(A) have not been disposed of by him. Hence the assessee filed appeals before the Tribunal immediately thereafter and it has resulted in a delay of 89 days. Having regard to the submissions made by the assessee in the affidavits, we are of the view that there was reasonable cause for the assessee in filing the appeals belatedly. Accordingly, we condone the delay and admit the appeals. 4. The facts relating to the case are stated in brief. The assessee was earlier known as M/s Bahupriya Properties Pvt Ltd. It is engaged in real estate business. During the course of assessment proceedings, the AO examined the "Work in Progress" (WIP) account of the assessee. He noticed that the assessee has incurred "Redemption Premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 crores in the year relevant to AY 2017-18, the assessee was required to pay balance amount of Rs.201.10 crores. Out of which the premium amount was determined as Rs. 100.57 crores and the assessee claimed the same as finance cost and accordingly included the same in WIP as on 31-03-2019. 5. The AO examined the claim of premium payable on redemption of OFCD. He, however, doubted the claim of the assessee for the following reasons :- (a) The assessee has received the funds for developing the land located at Powai. However, the development rights were given to a sister concern named M/s Skyline Great Hills (SGH). However, the examination of final accounts prepared by SGH revealed that no development work has taken place. The facts also show that the development agreement was subsequently cancelled. The assessee had paid money to SGH earlier and the same received back. (b) It is noticed SGH has utilized the amount received from the assessee for giving advances to the partners and other business activities, i.e., it did not used the said funds for development of the land. (c) In development agreements, land owner allows the developer to develop land against which the developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land. Accordingly a Joint Development Agreement (JDA) was entered on 04-04-2008 between the assessee and SGH. Accordingly, the SGH granted development rights to the assessee company. As per JDA, the assessee was obligated to carry out development activities and incur all the costs which are necessary for development of land. The SGH was obliged to obtain approvals/clearances from various departments. Subsequently a supplementary agreement was entered, as per which the assessee should pay interest free deposit of Rs. 102 crores to SGH. 7. Accordingly, the assessee submitted before the AO that the factual aspects have been wrongly understood by the AO. It was explained that the assessee has got the development rights from SGH. It is not the case that the assessee had granted such rights to SGH. It was further submitted that the Joint development agreement was examined by the AO of SGH in its assessment proceedings, since the AO took the view that the amount received by SGH is assessable as deemed dividend u/s 2(22)(e) of the Act. However, the Ld CIT(A) has accepted the genuineness of JDA. The ITAT has also held that the security deposit received by SGH was for business purposes onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment order, we notice that the AO has taken the view that the OFCDs were not converted into equity shares by the promoters of the assessee company only for the reason that they will lose the controlling interest over the assessee company upon such conversion. As pointed out by Ld A.R, there are fallacies in this argument of the assessing officer. We discuss the same below :- (i) Even if it is assumed for a moment that the OFCDs are converted into equity shares, then it is not the case that the premium amount shall be waived by the new owner, viz., UIVCL. This is for the reason that the premium amount is paid on OFCDs for the period prior to the conversion, if any. Thus, the premium amount shall be payable by the assessee company under both the situations, viz., on redemption of OFCD and also upon conversion of OFCD into equity shares. Hence, the AO was not correct in presuming that the premium amount shall not be payable if the OFCDs were converted into equity shares. (ii) Secondly, as per the agreement, the conversion of OFCD is at the option of the UIVCL and not at the option of the assessee company, meaning thereby, the assessee does not have any say in this matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CDs for incurring the development expenses and also for giving the security deposit to SGHare as per the terms and conditions of Joint Development Agreement. The funds received from UIVCF have been used by the assessee for development of land and also for paying security deposit to SGH in a phased manner. The relevant details are tabulated as under in page 23 and 24 of the order passed by Ld CIT(A): Asst. Year Funds received from UIVCF Security deposit paid to SGH Cumulative WIP 2009-10 57,00,00,000 54,79,85,717 2,06,78,741 2010-11 68,32,00,000 64,06,78,997 3,78,52,144 2011-12 74,82,00,000 64,06,83,497 14,90,86,945 2012-13 107,75,89,100 84,95,80,000 21,18,70,531 2013-14 107,75,89,100 84,95,80,000 23,40,34,602 2014-15 109,50,89,100 84,95,80,000 26,62,48,766 The above table shows that the funds received from UIVCF were used by the assessee for the purposes of business only. (f) that the JDA was terminated in AY 2019-20 and the assessee has received back the security deposit from SGH. 13.1. From the facts discussed above, it can be seen that the AO has not properly understood the facts surrounding the issue. The leasehold rights and possession of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures in the Financial Year ending on 31 March 1985, which were liable to be redeemed in Financial Year 1991-92 at a premium of Rs. 15 lakhs. The amount which was expended by the assessee towards the premium of Rs. 15 lakhs is, properly construed, a liability which the assessee incurred for the purpose of its business in order to obtain the use of the funds for the period covered by the issue of Non Convertible Debentures. The payment of a premium at the end of the term which is fixed for the Non Convertible Debentures and upon which the debentures are to be redeemed is the flip side of a situation where the assessee issues debentures at a discount. In the case of a discount, the assessee has the benefit of the funds which are realised from the issue of the debentures, over the term of the debentures. In the case of a premium which the assessee pays, the premium paid on the date fixed for redemption is in consideration of the use of the funds by the assessee until such date as the debentures fall due for redemption. The principle which has been laid down by the Supreme Court in Madras Industrial Investment Corpn. Ltd *. (supra) to hold that the additional liability equivalent to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
