Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 743 - AT - Income TaxClaim of deduction (expenditure) on account of Premium payable on redemption of debentures - whether premium payable on redemption of debentures is allowable when which it is actually incurred in the year of redemption of the debentures or could be proportionately spread over the period prescribed for maturity of such debentures? - HELD THAT:- This issue as noted by the Ld. CIT(A) is squarely covered by the decision of Hon’ble High Court in the case of CIT vs. Jagatjit Industries Ltd. [2006 (5) TMI 72 - DELHI HIGH COURT] wherein the Hon’ble High Court relied upon the ratio and principle laid down in the case of Madras Industrial Investment Corporation Ltd.[1997 (4) TMI 5 - SUPREME COURT] wherein as held that is important is that the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. The Tribunal was in that view perfectly justified in allowing the deduction claimed by the assessee No infirmity in the order of the Ld. CIT(A) that assessee’s claim in respect of proportionate premium on redemption of debentures and in the profit and loss account on the proportionate basis is allowed. Therefore, the addition has rightly been deleted. Disallowance u/s 14A read with Rule 8D - AO had made the disallowance mainly on the computation of disallowance provided by the assessee before the AO - Non recording of satisfaction by AO - HELD THAT:- Whatever exempt income was earned was from mutual fund held earlier which too was liquidated in this year and short term capital gain was offered to tax. When assessee had not made any disallowance in the computation of income AO as per mandate of section 14A(2) was required to examine the accounts of the assessee if he is satisfied with the correctness of the claim of the assessee. He has failed to even note that the investment as noted by him was not capable of yielding exempt income. This clearly shows that there was no application of mind before mechanically proceeding to make the disallowance under Rule 8D. Nowhere it is borne out that assessee had made any offer or surrender of disallowance before the AO. It is just that what should be the computation of disallowance under Rule 8D which was worked out by the assessee before the AO without even noting the fact that disallowance itself is more than the exempt income. Under these circumstances we do not find any reason for upholding the disallowance under Rule 14A because AO has failed to record his satisfaction having regard to the accounts maintained by the assessee as required u/s 14A (2). - Decided in favour of assessee.
|