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2015 (5) TMI 618 - DELHI HIGH COURT

2015 (5) TMI 618 - DELHI HIGH COURT - TMI - Allowability of Interest amount which was not paid - whether amounts to actual payment as contemplated by Section 43B? - Held that:- From the AO's order, it is evident that the loans, in respect of which the assessee claims deduction of interest under Section 43B, were taken from ICICI, IDBI and IFCI. These entities are included within the definition of "public financial institution" set out in Section 4A of the Companies Act, 1956 .

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hus, the doubt stands removed in view of Explanation 3C. Thus in view of the Explanation 3C appended to Section 43B with retrospective effect from 01.04.1989, conversion of interest amount into loan would not be deemed to be regarded as actually paid amount within the meaning of Section 43B of the Act. - Decided in favor of revenue. - ITA No. 191/2003 - Dated:- 30-4-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. For the Appellants Rep by: Mr N P Sahni, Sr. Standing Counsel & Mr Nitin Gulati, Jr .....

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s interest liability before Financial Institutions (IFCI, IDBI and HDFC Bank), asserting that this did not amount to "payment". Thus, this entitled the assessee to the benefit. The Assessing Officer (AO) disallowed the sum of ₹ 5,00,03,643/-. The CIT (Appeals) reversed the decision. The Income Tax Appellate Tribunal (hereinafter referred to as "the ITAT") upheld the CIT (Appeals) s order on the ground that payment under Section 43B included said constructive payment. 3. .....

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nto a loan or advance shall not be deemed to have been actually paid." 4. An identical question had been framed by the Telangana and Andhra Pradesh High Court in Commissioner of Income Tax-II v. Pennar Profiles Limited (framed and decided) I.T.A. No. 289/2003 decided on 11.02.2015. After noticing the backdrop of similar facts, the High Court held as follows:- "8. In this backdrop, we have perused the provisions contained in Section 43B of the Act, in particular, Explanation 3C thereof, .....

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assessee without referring to Explanation 3C appended to Section 43B of the Act. 9. As a matter of fact, from reading of Explanation 3C, in our opinion, the question as raised in the present appeals stands answered without further discussion. This provision was inserted for removal of doubts and it was declared that deduction of any sum, being interest payable under clause (d) of Section 43B of the Act, shall be allowed if such interest has been actually paid and any interest referred to in that .....

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