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2022 (5) TMI 777 - AT - Income TaxRevenue expenditure or capital expenditure - Disallowance on account of fee paid to Registrar of Companies for increase in authorized share capital - HELD THAT:- It is on record that the increase in authorized capital was necessitated due to CDR and under the CDR, there was no fresh inflow of funds, only the existing debts were restructured whereby the OCCRPS were issued. Being so, we observe that the situation is governed by the decision in General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT] and not by Brooke Bond India Ltd [1997 (2) TMI 11 - SUPREME COURT] Therefore, we are of the view that the assessee has rightly treated the impugned expenditure as a revenue expenditure and claimed deduction and the lower authorities are wrong in disallowing deduction. Accordingly, we accept this Ground of assessee. Disallowance on account of expenditure incurred for CDR - HELD THAT:- CDR is nothing but re-conditioning of the existing loans and debts. The expenditure claimed by the assessee under the title of “CDR charges” are various expenses for implementing the activities of the CDR. In fact, the major component of Rs. 1,46,45,814/- is a sum of Rs. 1,00,00,000/- paid to the ICICI bank by way of remuneration since the ICICI Bank had acted as a “Monitoring Institution”. Thus there is neither acquisition of any kind of enduring advantage nor the expenditure could be termed as capital. At this stage, for the sake of completeness, we would like to address a pertinent concern of the revenue which the Ld. AO has mentioned in the order of assessment. According to the Ld. AO, by virtue of CDR, the debt was converted into equity (i.e. OCCRPS) and hence there is a benefit of enduring nature. In this regard, firstly we would like mention that the CDR contains several waivers and modifications granted by the lenders and the conversion of debt into OCCRPS is just a part of the whole package. Moreover, the conversion of debt into OCCRPS is also well-addressed in our earlier discussion where we have observed that by issue of OCCRPS, there was no fresh inflow of the capital or increase in capital employed. Hence there is no benefit of enduring nature even by converting debt into OCCRPS, as per the ratio laid down in General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT] Thus, we are of the considered view that the expenditure incurred by the assessee is a revenue expenditure and deserves deduction. We therefore, accept the claim of the assessee. Disallowance on account of interest u/s 43B - HELD THAT:- After a careful consideration we find adequate strength in the findings of Ld. AO noted earlier. For the sake of brevity, we do not repeat the same. However, we agree with the Ld. AO that the interest payable to those three banks attracted section 43B(e). Hence the Ld. AO has made a proper disallowance, which we uphold. Therefore, this Ground of assessee is dismissed. Addition u/s 115JB towards disallowance u/s 14A even if the disallowance u/s 14A is sustained in normal computation - HELD THAT:- This issue is squarely covered by the decision of Special Bench in ACIT Vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] where it was held that the disallowance computed u/s 14A of the Act cannot be added while computing book-profit u/s 115JB. Respectfully following the decision of Hon’ble Special Bench, we accept this ground.
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