TMI Blog2013 (8) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... There is a difference between the interest which can be treated at par of consideration and the interest which is different form compensations or consideration. If the interest is paid for delay in making the payment then it cannot be treated as part of consideration. In the case in hand the delay for which the interest has been received by the assessee is in the process of buy back of shares in the open offer after announcement of the intention of acquiring of shares. It is not a case of delay in making the payment of the determined consideration after the transaction of purchase of sale is over - amount of interest which relates to the period prior to tendering and acceptance of the shares falls within the ambit of consideration received by the assessee against the shares tendered in the open offer - interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration - additional amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the honourable Income-Tax Appellate Tribunal to decide this appeal according to law." 3. Ground No. 1 regarding taxing the additional amount of Rs. 7,07,76,547/- received by the assessee as per the order of SEBI being 15% interest for delay in payment of proceeds of shares tendered under the open offer of Castrol UK. The assessee is a company incorporated in Mauritius and has obtained registration with the Securities Exchange Board of India (SEBI) as a sub-account of Genesis Asset Managers Ltd., registered Foreign Institutional Investor (FII). The assessee was holding the shares of Castrol India Ltd. which is a subsidiary of Castrol Ltd. UK. Due to Global Acquisition of Burmah Castrol Plc by the British Petroleum through the press announcement of its intention to acquire the entire share capital of Burmah Castrol Plc on 14.3.2000, the consequential open offer was announced for acquisition of 20% of the issue capital of Castrol India Ltd. On 10.7.2000 B.P. Plc approached the SEBI seeking exemption from the requirement of making a public offer for acquisition of upto 20% of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived additional amount of Rs. 7,07,76,547/- and net amount after deduction of TDS at Rs. 4,10,50,397/- on account of interest @ 15% per annum. The Assessing Officer while completing assessment treated the said amount of Rs. 7,07,76,547/- as interest income and taxed the same @ 48%. The assessee challenged the order of the Assessing Officer before the CIT(A) inter alia contended that the additional consideration received from Castrol UK is exempted under the provisions of Article 13(4) of Indo Mauritius Treaty because the said amount was nothing but capital gain arising to the assessee from transfer of shares. Alternatively the assessee contended that the receipt of the amount in question is not the interest under Article 11 of the Indo Mauritius Treaty because it is not an income from debt claim and there is no debtor-creditor relationship between the assessee and Castrol UK. The CIT(A) did not accept the contention of the assessee and upheld the action of the AO. 4. Before us the Ld. Counsel for the assessee has submitted that the term interest as given under Article 11(5) means the income from debt claim and penalty charges for late payment shall not be regarded as interest fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of this Tribunal in case of SET Satellite (Singapore Pte Ltd.) dated 25.6.2010. 5. On the other hand, the Ld. DR has relied upon the orders of the authorities below and submitted that in the decision of Securities Appellate Tribunal as well as Hon'ble High Court it has been clearly set out that the nature of payment is interest and not the penalty. The rate of interest has been determined by comparing it with the rate of interest payable on refund of application money u/s 73 of the Companies Act and this aspect has been considered by the SEBI as well as SAT which has been upheld by the Hon'ble High Court. The payment of interest @ 15% per annum has been paid because of deprivation of the use of money. 6. We have considered the rival submissions as well as relevant material on record. The order of SEBI for payment of interest and particularly the rate of interest was challenged by the holding company before the SAT as well as Hon'ble High Court. It is clear that the payment of interest was directed by the SEBI under regulations 22 and therefore it was held that this is not a penalty but the payment of interest on account of failure to make the payment by the acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or paid for such delay, such interest is only an accretion to the assessee's receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held, to say that this interest is totally de hors the contract business carried on by the assessee. It is well settled that interest can be assessed under the head "Income from other sources" only if it cannot be brought within one or the other of the specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as "income from other sources". The second question is, therefore, answered in favour of the assessee and against the Revenue." 7. In the case in hand the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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