Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 93 - AT - Income TaxRevenue recognition - Interest against the advance made to SLCCL - whether compensation received from SICCL was in the nature of Interest against the advance made to SICCL and not in the nature of capital - HELD THAT:- Receipt of ₹ 35 crones is nothing but interest on money given to M/S Sahara India Commercial Corporation Ltd.[SICCL] - The appellant has furnished additional submission vide letter dated 02.01.2016 which is unsigned. Therefore, no cognizance is taken of this letter. Compensation received is of capital nature especially in view of the fact that ₹ 35 crores was received on 09.04.2007 merely five days after such and so called agreement was entered into. It is pertinent to note that principle amount of ₹ 400 crores was received on 25.05.2007. M/s Sahara India Commercial Corporation Ltd. itself had treated ₹ 35 crores as Interest only. The action of AO in taxing ₹ 3,33,00,000/- is confirmed. These grounds of appeal are dismissed. Treatment of interest earned as Income from other sources - During the course of appellate proceedings, the AR of the appellant filed written submission. I have considered the findings given by the AO and written submission filed by the AR of the appellant. The AO has added ₹ 3,33,00,000/- as income from other sources. The appellant has submitted that the learned AO has erred in treating the interest earned including proportionate compensation under the head income from other sources against the business income a claimed by the appellant. The learned AO has failed to appreciate the fact that the Interest of ₹ 1.69 crores was earned from the Inter Corporate Deposits made to Indus City Scapes Construction Pvt. Ltd. The AO observed that the appellant’s income consists of rental Income and interest Income only. Therefore, the AO has correctly taxed ₹ 3,33,00,000/- under the head ‘income from Other Sources’ . Addition u/s 40(a)(ia) - transaction was a colourable device to reduce taxable income - if at all the transaction was in accordance with commercial necessity, the expense was in the nature of interest expense and the assessee was liable to deduct TDS - HELD THAT:- As the parties themselves have not acted upon the terms and conditions as laid out in the said agreement, the appellant cannot now pleaded that other terms and conditions contained in this agreement be construed as not ambiguous. The action of Assessing Officer in adding as interest income is confirmed. This ground of appeal is dismissed. There is a difference between discount allowed and interest paid. In the case of the appellant as there was no purchase or delivery of goods or bills raised as held earlier, there cannot be any discount allowed. The amount of ₹ 7,82,68,493/- cannot be termed as discounting charges and is in the nature of interest paid on money borrowed wherein receivable from subsidiary company might have acted as security or a loan of ₹ 100 Cr. As interest is liable for TDS, the action of AO is adding u/s. 40(a)(ia) is confirmed. TP Adjustment - ALP of the service charges / commission on extending corporate guarantee to the AEs - HELD THAT:- ALP on corporate guarantee has already been examined by the jurisdictional bench of Chennai ITAT in the case of Redington India Ltd. v. JCIT [2014 (10) TMI 669 - ITAT CHENNAI]which was applied by the DRP in the assesses case itself , supra, we do not find any reason to interfere with the order of the DRP and hence the corresponding grounds of the Revenue are dismissed .
|