TMI Blog2023 (4) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ABY T. VARKEY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For the Appellant : Mr. N.Arjun Raj, C.A for Mr. S. Sridhar, Advocate For the Respondent : Mr. D. Hema Bhupal, JCIT ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assesse company against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Chennai dated 19.02.2020 for assessment year (AY) 2015-16. 2. At the outset, it was brought to our notice that there is delay of 41 days in filing the appeal. The Ld. AR for the assesse submitted that the delay was due to pandemic caused by Covid-19 and the period (41 days) are covered by the Hon ble Supreme Court s order [in Misc. Application No.665 of 2021 vide wherein the Hon ble Apex Court vide order dated 23.03.2020 had given direction that delay is to be condoned or limitation period to be extended as the case may be during the period between 15.03.2020 to 14.03.2021 which was further extended up to 28.02.2022 in Misc. Application No.21 of 2022 and again extended vide order dated 10.01.2022 up to 28th May, 2022 suo-moto by the Apex Court]. Since, the Hon'ble Supreme Court has condoned delay of the aforesaid peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before the AO, copy of balance sheet as on 31.03.2002 and allocation communication received from M/s.Edelweiss about the one time settlement. The AO acknowledged that the allocation communication received from M/s.Edelweiss gave account-wise details of allocation settlement with assessee as well as its other sister concerns which were as under:- i) Famtex Garments : Rs.7.83 crores ii) Amex Garments : Rs.5.04 crores iii) Hamosons Exports : Rs.8.03 crores Total : Rs.21.00 crores The AO, thereafter took note of M/s.Edelweiss letter about details of one-time settlement, wherein it has been agreed that outstanding liability would be settled for an amount of Rs.21 crores instead of Rs.23 Crs., if paid on or before 31.03.2015 and the bifurcation was given as under:- Name of Entities Principle outstanding Bifurcation ratio as per principle outstanding Settlement amount Famtex Exports P.Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of negotiations one time settlement was arrived at between them. And as per settlement, the assessee as well as sister concerns has to remit total of Rs.23 crores. But, if the assessee and its sister concerns, paid on or before 31.03.2015, Rs. 21 crores to M/s.Edelweiss, then debit will be settled as given in the bifurcation chart (supra). Therefore, the assessee and its sister concerns made payment of Rs.21 crores before 31.03.2015 and thus, the assessee had repaid principle outstanding of Rs.2.79 crores by one-time settlement payment of Rs.8.13 crores. Therefore, interest component would be Rs.5.20 crores (Rs.8.13 Rs.2.79) which was claimed as deduction, since actual payment of interest was made in this year. We note that similar issue had cropped up in the case of assessee s sister concern i.e. M/s.Amex Garments Pvt. Ltd.,, wherein similar disallowance was made in the case of M/s. Amex Garments Pvt. Ltd., which came up before this Tribunal, in ITA No.2513/Chny/2018 for AY 2015-16, wherein the Tribunal accepted the Ld.CIT(A) s action in that case, allowing deduction claimed by the assessee. We note that the Tribunal in assessee s sister concern case Amex Garments Pvt. Ltd (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,71,93,738/- and difference amount of Rs.3,32,06,262/- has been accounted as interest payable on loans. The assessee had claimed deduction for said interest u/s.36(1)(iii) on payment basis in terms of provisions of section 43B(e) of the Income Tax Act, 1961. The learned CIT(A) after considering relevant facts and also by following certain judicial precedents, including decision of the Hon ble Madras High Court in the case of M/s. Chemicals Plastics India Ltd. Vs. CIT (supra), had held that once loan availed from bank has been utilized for the purpose of its business, interest payable in respect of said loans is allowable as deduction. The learned CIT(A) further recorded that deduction towards interest was admissible in respective year to which it pertains, but same was allowable only on payment basis in terms of section 43B of the Act. Since the assessee has made payment of interest on loans for impugned assessment year, it has rightly claimed deduction towards said interest on payment basis, as per provisions of section 43B of the Act. The findings of fact recorded by the learned CIT(A) in light of facts brought out by the Assessing Officer and arguments advanced by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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