9911796707
TMI Blog2014 (2) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 'paid' by the assessee. 2. The assessee is maintaining Cash Credit/Over draft account with the bank. In both the AYs, interest was credited to the said account of the assessee. During re-assessment proceedings, the Assessing Officer held that the term 'paid' means that the amount should have been actually paid. Transfer of amount from one account to another account cannot be treated as 'paid'. The Assessing Officer made dis-allowance u/s.43B of the interest amount in both the AYs. Aggrieved against the assessment order for the respective AYs, the assessee preferred appeals before the CIT (Appeals). The CIT (Appeals) placed reliance on the decision in the case of Eicher Motors Ltd Vs. CIT, Indore reported as 315 ITR 312 (MP) and the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the Revenue submitted that the assessee has not actually 'paid' the interest amount. There is no decrease in the liability rather the liability of the assessee has increased by the credit of the amount in the cash credit account of the assessee. The assessee has merely postponed the liability. The ld.DR vehemently supported the orders of the CIT(Appeals) and prayed for the dismissal of the appeals of the assessee. 5. We have heard the submissions made by the representatives of both the sides and have also perused the orders of the authorities below. The Assessing Officer has made addition of interest amount Rs. 21,35,626/- for the AY.2004-05 and Rs. 87,73,661/- for the AY.2005-06 u/s.43B of the Act. In appeal, the CIT (Appeals) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation 3D. - For the removal of doubts, it is hereby declared that a deduction of any sum, being interest payable under clause (e) of this section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or advance shall not be deemed to have been actually paid". A bare perusal of the Explanation 3C and 3D makes it clear that any interest on loan from public financial institution or Scheduled Bank which has not been actually paid and has been converted into loan or borrowings or advance shall not be deemed to have been paid. 7. In the judgments referred to by the CIT(Appeals), the assessees had made interest payments after borrowings in the form of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is permitted to withdraw the amount of overdraft allowed as and when he/she needs it and to repay it through deposits in the account as and when it is convenient to him/her. The Overdraft limits are determined by the banks on the basis of sales, inventory and collateral security etc. The limits are reviewed on year to year basis. Whereas in term loan, the loan amount is fixed and does not vary on day to day basis. The amount is repaid after the expiry of the specified period in instalments. The loan money is given for a definite purpose and for a pre-determined period. In our considered opinion, the judgments of the Hon'ble High Courts in the case of Eicher Motors Ltd Vs. CIT, Indore (supra) and Kalpana Lamps & Components Ltd., Vs. DCIT (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
