Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 24 - ITAT MUMBAI

2016 (6) TMI 24 - ITAT MUMBAI - TMI - TDS u/s 196C - non deduction of TDS on premium/interest payable on redemption of FCCB by amortization on pro-rata basis of implicit rate of return over the period of bonds along with the TDS payable and charged to the Securities Premium Account periodically assessee in default u/s. 201(1) & 201(1A) - Held that:- As during the financial year ended on 31st March 2011, there was no question of there being any income by way of interest, as the FCCB' s were zero .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Supreme Court in the case of E. D. Sassoon & Company Ltd. and Others v/s. CIT (1954 (5) TMI 2 - SUPREME Court ).

The decision in the case of Pfizer Ltd. [2012 (11) TMI 164 - ITAT MUMBAI] is of relevance because in that case the ITAT has held that there was no question of treating the assessee as an "assessee in default" in respect of non-deduction of TDS, even though the assessee had made a provision for expenses in its books of accounts.

Now, coming to the observation ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd any merit in the AO's action for holding the assessee as “assessee in default” for non-deduction of tax at source. - Decided in favour of assessee. - ITA No. 7727/Mum/2014 - Dated:- 27-5-2016 - Shri R. C. Sharma, AM And Shri Amarjit Singh, JM For the Assessee : Sh. F. V. Irani & N. A. Patade For the Revenue : Ms. Anupama Shukla ORDER Per R. C. Sharma (A. M ) This is an appeal filed by the assessee against the order of CIT(A)-Mumbai, for the assessment year 2011-12. 2. The grievance of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Bonds" ("FCCB") of USD 275 million (2,750 FCCBs of USD 1,00,000 each) with a tenure of 5 years redeemable on 04 December 2012. The FCCBs were to be redeemed at the rate of 139.37% of the principal amount. The terms of issue of FCCBs also provided for an option to the FCCB holders to get the bonds converted into equity shares with full voting rights with a par value of ₹ 10 each at a conversion price of ₹ 92.2933 per share with a fixed rate of exchange on conversion of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6C is to be deducted. But the assessee, in the relevant FY has not deducted TDS as per applicable provisions of section 196C. Further, the assessee in their books of accounts has treated the said premium/interest payable on redemption of FCCB by amortization on pro-rata basis of implicit rate of return over the period of bonds along with the TDS payable and charged to the Securities Premium Account periodically. Thus, as per AO the assessee committed default u/s 196C and liable to proceedings u/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e FCCBs provides an option to the FCCB holder to get the bonds converted into equity shares or redeem the same. In case the same are not converted into equity shares during the period of FCCBs, they shall be redeemed on the date of maturity i.e. 04/12/2012. 6. The crucial question before us is as to whether the assessee can be treated as an assessee in default‟ for not deducting tax at source u/s.196C of the IT Act in the assessment year 2011-2012 in respect of premium on the Zero percent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on was, in fact, exercised as is evident from the order dated 5th March, 2014 passed u/s.143(3) r.w.s.144C(3) of the Act for the assessment year 2010-2011. The FCCB‟s were redeemable at a premium of 39.37% payable on maturity in the event of the bond not being earlier bought back or converted into shares. 7. The provisions of Section 196C of the Act, reads as under :- Where any income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in Section 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny dividends referred to in Section 115-O. It is evident from the above that the following cumulative conditions precedent (ALL of which are required to be satisfied) are required to be fulfilled before an assessee can be regarded as obliged to deduct tax u/s. 196C of the Act. The Section is analyzed below: IF: A. Any income by way of interest in respect of bonds B. Is payable C. To a non-resident D. TDS thereon has to be deducted: I. At the time of credit to the account of the payee; or II. At .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the case of the assessee. We also found that during the financial year ended on 31st March 2011, there was no question of there being any income by way of interest, as the FCCB' s were zero percent bonds carrying no interest and only giving the bondholder a right to get a premium of 39.37% on maturity. We also found that no interest whatsoever was payable during the financial year ended 31 March 2011. The word "payable" requires that a liability must accrue against the assessee d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version