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2016 (4) TMI 750 - ITAT CHENNAI

2016 (4) TMI 750 - ITAT CHENNAI - TMI - Interest received u/s.244A in regard to interest on refunds due - treated as the income of the assessee - Held that:- In the case of the assessee there are no directions by the State Govt., for staying its income. The fact remains that by virtue of order of the Tribunal, the income has crystallized to the assessee in accordance with mercantile system of accounting. Merely an appeal filed by the Revenue before the Hon’ble High Court will not result in stayi .....

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f term loan. Therefore, it is necessary to link this expenditure with the benefit obtained by the assessee company for the balance period of term loan considering the matching principle of accountancy and the mercantile system of accounting in arriving at the correct income for the relevant assessment years. Moreover it is pertinent to mention that the balance period of the term loan and the income attributable to the savings in interest is ascertainable unlike in the case of deferred revenue ex .....

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of reduction of interest is enjoyed by the assessee company in order to comply with the matching concept and mercantile system of accountancy which is stipulated in Accounting Standard-I and mandatory in the case of the assessee as it is a limited company and there by allow the deductions in the relevant assessment year and the relevant succeeding assessment years - Decided against assessee

Disallowance of dividend tax paid u/s.115-O - Held that:- It is pertinent to mention that tax p .....

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cannot be considered because section 115-O of the Act specifically provides that dividend tax is payable in addition to the income tax chargeable in respect of the total income of a domestic company. For the aforesaid reasons, we do not find it necessary to interfere with the orders of the Revenue.- Decided against assessee - I.T.A.No.614/Mds/2014 - Dated:- 24-2-2016 - SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Appellant : Dr.Anitha Sumanth, Advoc .....

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d Assessing Officer wherein the learned Assessing Officer had treated the amount of ₹ 6,31,047/- (being the interest received under section 244A in regard to interest on refunds due from the Revenue) as the income of the assessee though the Department was on appeal before the Hon ble High Court against granting such interest by the Tribunal to the assessee. ii) The learned Commissioner of Income Tax (Appeals) has erred in confirming the order of the learned Assessing Officer, wherein the l .....

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y engaged in the business of manufacturing of paper and boards filed its return of income for the assessment year 2005-06 on 28.05.2009 returning Nil income. Subsequently, the case was taken up for scrutiny and assessment was completed under section 143(3) of the Act on 31.12.2007 wherein the learned Assessing Officer made several additions. Ground No.1- Interest received u/s.244A of the Act for ₹ 6,31,047/-:- 4. During the course of assessment proceedings, it was observed by the learned A .....

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on appeal before the Hon ble High Court, this income has not crystallized and therefore not considered while computing the taxable income of the assessee following the mercantile system of accounting. The learned Assessing Officer did not accept the contentions of the assessee and brought the same under the ambit of tax. The learned Commissioner of Income Tax (Appeals) also confirmed the order of the learned Assessing Officer. 5. The learned Authorized Representative cited several decisions and .....

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that even though the assessee company was following mercantile system of accounting, no real income had occurred due to the directions of the State Govt., and therefore such income cannot be taxed in the relevant assessment year. However, in the case of the assessee there are no directions by the State Govt., for staying its income. The fact remains that by virtue of order of the Tribunal, the income has crystallized to the assessee in accordance with mercantile system of accounting. Merely an .....

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order of the learned Commissioner of Income Tax (Appeals) on this issue. Ground No.2 - Addition of ₹ 1,77,43,075/- towards disallowance of pre-payment of premium made to IDBI pertaining to succeeding years:- 7. During the course of assessment proceedings, it was observed by the learned Assessing Officer that the assessee had debited in its profit and loss account an amount of ₹ 3,80,56,306/- as deferred revenue expenditure. It was explained by the assessee that it had obtained loan f .....

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e assessee complied. It was therefore submitted that the expense of ₹ 3,80,56,306/- has crystallized during the relevant assessment year and therefore it should be allowed as deduction. However, the learned Assessing Officer disallowed an amount of ₹ 1,77,45,075/- on proportionate basis being the premium attributable to the benefit of reduction in interest for the balance period of term loan. On appeal the learned Commissioner of Income Tax (Appeals) taking into consideration of the .....

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n support of the orders of the Revenue. 10. We have heard both the parties and carefully perused the materials available on record. From the facts of the case, it is evident that the assessee had paid premium of Rs. ₹ 3,80,56,306/- in order to reduce its interest liability from the relevant assessment years till the balance period of term loan. Therefore, it is necessary to link this expenditure with the benefit obtained by the assessee company for the balance period of term loan consideri .....

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such disallowance which is further confirmed by the learned Commissioner of Income Tax (Appeals). However, we hereby modify the orders of the Revenue, by directing the learned Assessing Officer, to ensure that the entire amount of ₹ 3,80,56,306/- be proportionately apportioned to the relevant period for which the benefit in quantum of reduction of interest is enjoyed by the assessee company in order to comply with the matching concept and mercantile system of accountancy which is stipulate .....

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