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2015 (2) TMI 251 - AT - Income TaxInterest payable u/s 43B disallowed - whether the conversion of interest payable into share capital under the restricting of loan would be treated as payment of interest for the purpose of section 43B(d) or not - Held that:- Interest expenditure which is otherwise allowable deduction u/s 36(1)(iii) but deffered as per the provisions of section 43B cannot be disallowed because of the reason that the payment is not in cash but by issuance of share capital. The amount of 8.82 crore was incorrectly assumed by the CIT(A) because the Assessing Officer has disallowed a sum of ₹ 8.82 crore on account of write back off restructured settlement amount which was already disallowed by the assessee in the computation of income. Apart from the said disallowance, the Assessing Officer has also disallowed a sum of ₹ 14 crore u/s 43B on account of conversion of interest payable into shares issued to IDBI. We find that these two amounts of disallowance are separate and distinct and there is no confusion or ambiguity in the order of Assessing Officer. The Assessing Officer took the business income as loss of ₹ 8.04 crore prior to the deduction of ₹ 14 crore. Therefore, the said amount was not allowed in the computation of total income by the Assessing Officer. Hence, we find that the CIT(A) has misunderstood the computation of total income in the assessment order. Accordingly, we set aside the direction given by the CIT(A) directing AO to make the disallowances of the sum of ₹ 14 crores as the same is factually incorrect. In view of the above finding we set aside the orders of authorities below on this issue and allow the claim of the assessee regarding the interest payable of ₹ 14 crore u/s 43 B. - Decided in favour of assessee.
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