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2022 (12) TMI 1477 - AT - Income TaxRevision u/s 263 - claim of deduction of the impugned interest on Perpetual Non-Convertible Debentures (PNCDs) - HELD THAT:- We find that the assessee during the course of assessment proceedings itself had submitted the entire facts of the case by placing reliance on various provisions of the Companies Act and SEBI Regulations and had also taken efforts to explain the meaning of the term “debentures”, “debts”, “bonds”, “shares” etc., under provisions of various Acts. The main case of the Revenue is only that the perpetual debentures issued are akin to equity and hence, it does not fall under the ambit of borrowing and accordingly, no interest would become allowable on the said alleged borrowing. In this regard, we find that assessee had already explained the very same query before the AO at the time of assessment proceedings itself which is evident from the reply filed by the assessee which is reproduced hereinabove at the beginning of the order. Moreover, we also find that these bonds were indeed repaid by the assessee on 18/03/2021 with interest and on 11/05/2021 with interest. The evidences in this regard are enclosed and the fact of repayment of these borrowings with interest had also been duly notified by the assessee to BSE Ltd. and NSE Ltd as per the requirement of SEBI regulations. This categorically goes to prove that it is not a case of equity and the issue of perpetual bonds is only borrowing made by the assessee. Since the said borrowing has been used for business purposes of the assessee, the interest paid thereon would be squarely allowable as deduction u/s. 36(1)(iii) of the Act. Hence, even on merits, the action of the ld. PCIT would have no legs to stand. Thus we have no hesitation in quashing the revision order passed by the ld. PCIT u/s. 263 of the Act. Accordingly, the grounds raised by the assessee are allowed
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