TMI Blog2021 (9) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras Industrial Investment Corporation Ltd.[ 1997 (4) TMI 5 - SUPREME COURT] wherein as held that is important is that the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. The Tribunal was in that view perfectly justified in allowing the deduction claimed by the assessee No infirmity in the order of the Ld. CIT(A) that assessee s claim in respect of proportionate premium on redemption of debentures and in the profit and loss account on the proportionate basis is allowed. Therefore, the addition has rightly been deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER Department by: Shri Manoj Kumar, CA Assessee by : Shri Mahesh Thakur, Sr. DR Ms. Nidhi Srivastava, CIT(DR) ORDER PER AMIT SHUKLA, J.M. The aforesaid appeals have been filed by the assessee as well as by the revenue against separate impugned orders of even date, 5.1.2018 the assessment year 2014-15 and order dated 5.1.2018 for the assessment year 2014-15. 2. In the Revenue s grounds of appeal, following grounds has been raised:- 1. Whether on facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 15,99,87,681/- made on account of Premium payable on redemption of debentur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 225 ITR 802 and Hon ble Bombay High Court in the case of CIT vs. Indian Rayon Industries Ltd. 236 CTR (Bom) 279 to justified the allowability of payment of premium payable on redemption of debentures. However, the Ld. AO observed that only at the time of redemption of debentures which is deductible and not on provisional basis every year during the tenure of the debentures. He accordingly disallowed the claim of ₹ 15,99,87,681/- on account of premium payable on redemption of debentures on proportionate basis. 5. However, Ld. CIT (A) accepted the assessee s contention after referring to the judgment of the Hon ble Delhi High Court in the case of CIT vs. Jagatjit Industries Ltd. 204 CTR 428 accepted the assessee s contention. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 15,99,87,681/- as made by the Assessing Officer is not justified and, hence, deleted. 6. After hearing both the parties and on perusal of the impugned orders, we find the only issue before us is, whether premium payable on redemption of debentures is allowable when which it is actually incurred in the year of redemption of the debentures or could be proportionately spread over the period prescribed for maturity of such debentures. This issue as noted by the Ld. CIT(A) is squarely covered by the decision of Hon ble High Court in the case of CIT vs. Jagatjit Industries Ltd. (supra) wherein the Hon ble High Court relied upon the ratio and principle laid down by the Hon ble Supreme Court in the case of Madras Industrial Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of the principle stated by the Supreme Court to the facts of the present case are concerned. What is important is that the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. The Tribunal was in that view perfectly justified in allowing the deduction claimed by the assessee. 7. This view has been reiterated by different High Courts in the following cases a) CIT vs. First Leasing Company of India Ltd. (Madras High Court) - Tax case b) National Engg. Industries Ltd. vs. CIT (cal.) 236 ITR 577 c) CIT vs. Tube ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat firstly assessee has not made suo moto disallowance u/s 14A despite the fact that it had earned exempt income during the year and secondly assessee had itself given a computation of disallowance under Rule 8D before the AO as AO had no option in absence of details of cost relating to exempt income. 12. After hearing both the parties and on perusal of impugned orders, we find that the investment which has been noted by the AO is on account of investment of ₹ 97,00,000/-in the growth scheme of Indiabulls Liquid Fund the income from which is taxable and form part of the total income. No exempt income has been earned on such investment. As on 31st March, 2014 there was no investment as it was disclosed as Nil. Whatever exempt incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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