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The Commissioner of Income Tax, The Income Tax Officer Ward-11 (2) , Bangalore Versus M/s. KLN Agrotechs Pvt. Ltd.

2015 (4) TMI 943 - KARNATAKA HIGH COURT

Deduction under Section 43B - Tribunal held that principal sum waived, is offered to tax, and as such, the disallowance is to be subsumed into offer on waiver of Principal, which is against the sum and substance of the scheme of allowing deduction under Section 43B which is based on actual payment of interest and recorded perverse finding - Held that:- If out of the total sum of ₹ 257.08 Lakhs which has been offered and subjected to tax by the assessee in its return, the amount of unpaid i .....

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tax, would come to the same. If we accept the argument of learned counsel for the appellant - revenue, then it would amount to the department having the cake as well as eating it, which would mean subjecting the assessee to double jeopardy. This cannot be permitted. Either the interest amount has to be allowed for deduction under Section 43B or the sum offered for tax (as waived by the Bank) has to be reduced by the amount of interest paid.

Thus we do not find that any infirmity with .....

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ng and trading of refined edible oil. The asseseee-Company had taken a loan from the Canara Bank which was to the tune of ₹ 387.82 Lakhs as term loan and ₹ 53.48 Lakhs as working capital loan, totaling to ₹ 441.30 Lakhs. Since there was default in payment of the loan amount by the assessee, the Bank declared the account of the assessee as non-performing asset (NPA). The total interest accrued in the said account of the assessee was ₹ 193.96 Lakhs i.e., the total outstandi .....

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Bank which was paid and the account was thereafter closed. In the returns filed by the assessee, towards the total amount of ₹ 378.72 Lakhs paid to the Bank, the assessee provided for ₹ 193.96 Lakhs as interest paid and claimed deduction under Section 43B of the Income Tax Act, 1961 (hereafter referred to as the Act ). After deducting the said amount of interest of ₹ 193.96 Lakhs from ₹ 378.72 Lakhs the figure of ₹ 184.76 Lakhs was taken as repayment towards princi .....

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f the assessee of adjusting the amount of ₹ 193.96 Lakhs towards interest and also its claim for benefit under Section 43B of the Act, and instead held that the entire amount of ₹ 378.72 Lakhs paid by the assessee as one time settlement with the Bank to be adjusted towards the principal amount of ₹ 441.30 Lakhs. Ultimately in the appeal filed by the assessee before the Tribunal, although the erroneous claim of the assessee in adjusting the amount of ₹ 193.96 Lakhs towards .....

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ppeal has been filed by the revenue raising the following substantial question of law: "Whether on the facts and in the circumstances, the Tribunal was correct in holding that principal sum of ₹ 2,57,08,826/- waived, is offered to tax, and as such, the disallowance of ₹ 1,93,96,881/- is to be subsumed into offer of ₹ 2,57,08,826/- on waiver of Principal, which is against the sum and substance of the scheme of allowing deduction under Section 43B which is based on actual pa .....

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subsumed into the offer of ₹ 257.08 Lakhs on waiver of principal amount. It is thus submitted that after the waiver of interest amount was disallowed, even though the amount of ₹ 257.08 Lakhs was subjected and offered to tax by the assessee, additional tax on the amount of interest (which had been disallowed) would have to be paid by the assessee. 6. In our view, the Tribunal has rightly held that the assessee cannot be subjected to double jeopardy i.e.., it could not be subjected to .....

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