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2012 (4) TMI 101 - AT - Income TaxAllow ability of discount charges in respect of debentures issued by the assessee while computing income from house property - the outstanding loans which were utilized for the construction of property were converted into deep discount debentures in assessment year 2001-02 - AO observed that it was a colourable device. - AO further observed that no interest liability had accrued to the assessee as the liability on account of interest would arise only on maturity of deep discount debentures. He therefore held that the claim of deduction under section 24(b) was not allowable and accordingly he disallowed the claim in both the years which was disputed by the assessee. - CBDT in Circular No.28[F 8/8/69-IT(A-I)] dated 20.8.1969 a copy of which has been placed by the assessee at page 46 of the paper book that fresh loan raised to repay the original loan used for construction of house property will be eligible for deduction under section 24(vi) which corresponds with present section 24(b) - Held that: the claim has already been allowed by the Tribunal in the initial year i.e., assessment year 2001-02 and appeal filed by the department has been dismissed by the Hon'ble High Court - the principle of re-judicata is not applicable in case of income tax proceedings, the rule of consistency has to be followed when there is no change in legal and factual position. In view of the judgment of Hon'ble Supreme Court in the case of Madras Industrial Finance Corpn. Ltd. (1997 -TMI - 5591 - SUPREME Court), the difference between the issue price and maturity value has to be spread over the debenture holding period and only proportionate amount can be allowed as deduction in a particular year. Tax liability in the hands of director - held that:- it is for the department to ensure that the director pays tax on interest income from year to year as it has power to enforce compliance and assessee can not be penalized for the failure of the department to take action in case of the director.
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