Tidel Park Limited, CHENNAI V. ACIT, CHENNAI

ITA 1242/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8101 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 04-11-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 22-05-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: J CHANDRASEKARAN
• Keywords: Cost of acquisition
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1 2 42/MDS/2015 / ASSESSMENT YEAR :20 0 0 - 0 1 M/S . TIDEL PARK LIMITED, 4, RAJIV GANDHI SALAI, TARAMANI, CHENNAI 600 113 . [PAN: A A BCT0666R ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CO MPANY CI RCLE II I ( 2 ), CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI J. CHANDRASEKARAN , C.A. / RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 0 4 . 11 .201 5 / DATE OF P RONOUNCEMENT : 03. 0 2 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 11 , CHENNAI , D ATED 30 . 01. 20 15 RELEVANT TO THE ASSESSMENT YEAR 2000 - 01. THE MAIN ISSUE RAISED IN THE GROUNDS OF APPEAL IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF THE PREMIUM PAID OF .20,35,000/ - . THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE PLEA THAT THE PREMIUM P AID BE TREATED AS PURCHASE COST OF THE BOND AND DEDUCTED FROM THE MATURITY VALUE OF THE BOND AND SHOULD TREATED AS ALLOWABLE EXPENDITURE. I.T.A. NO . 1 242 /M/ 15 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE PROMOTION OF INFORMATION TECHNOLOGY PARK AND FILE D ITS RETURN ADMITTING NIL INCOME. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND SUBSEQUENTLY, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 28.02.2003. THEREAFTER, TH E ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 04.03.2007 BY RECORDING REASONS THEREON. VIDE ITS LETTER DATED 30.03.2007, THE ASSESSEE HAS REQUESTED THE ASSESSING OFFICER TO TREAT THE RETURN FILED ON 30.11.2000 AS A RETURNE D FILED IN RESPONSE TO THE NOTICE UNDER 148 OF THE ACT. SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) OF THE ACT WAS ALSO ISSUED ON THE ASSESSEE. FURTHER, DURING THE COURSE OF HEARING, THE ASSESSEE WAS ASKED TO PRODUCE CERTAIN DETAILS AND WITH REGARD TO THE PU RCHASE AND SALE OF ICICI BONDS AND THE ASSESSEE HAS ALSO SUBMITTED ALL THE DOCUMENTS AND THE SAME WERE VERIFIED BY THE ASSESSING OFFICER. AFTER VERIFICATION OF DOCUMENTS FILED BY THE ASSESSEE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING O FFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT BY ASSESSING TOTAL TAXABLE INCOME OF THE ASSESSEE AT .3,85,37,985/ - BY MAKING VARIOUS ADDITIONS. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. I.T.A. NO . 1 242 /M/ 15 3 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS PURCHASED BONDS ISSUED BY ICICI LTD. FROM ICICI SECURITY & FINANCE CO. LTD. WHO WERE THE HOLDER OF THE BONDS AT THAT TIME. ON THE DATE OF MATURITY, ICICI LTD. PAID THE MATURITY VALUE TO THE OWNER OF THE BONDS. THE ASSESSEE WAS THE OWNER OF THE BONDS AT THE TIME OF MATURITY AND HENCE RECEIVED THE MATURITY VALUE AND WAS DEDUCTED TDS ON THE GROSS VALUE OF INTEREST. FROM THE COPIES OF BONDS, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE IS NOT THE DIRECT PURCHASER OF BONDS BUT PURCHASED FROM THE INTERMEDIARY HOLDER ICICI SECURITY & FINANCE CO. ON CUM INTEREST PRICE BASIS WHEREIN THE PURCHASE PRICE INCLUDES THE INTEREST ELEMENT FOR THE PERIOD OF HOLDING OF THE BONDS BY THE PREVIOUS OWNERS. THE ASSESSEE HAS PURCHASED THE BONDS WITH FACE VALUE OF .5 CRORES FOR .5.34 CRORES AND BONDS WORTH OF .15 CRORES FOR .16.25 CRORES AND THE DIFFERENCE IN THE PURCHASE VALUE INCLUDES TWO COMPONENTS: (I) ACCRUED INTEREST FOR THE BONDS (II) PREMIUM ON THE BONDS. BONDS (VALUE IN RS.) ACCRUED INTEREST TILL PURC HASE (RS.) PREMIUM PURCHASE (RS.) 5,00,00,000 24,82,876.71 9,55,000 15,00,00,000 1,14,75,000.00 10,80,000 I.T.A. NO . 1 242 /M/ 15 4 6. THE ASSESSEE HAS ALREADY PAID THE INTEREST COMPONENTS OF . 0.24 CRORES AND .1.14 CRORES ALONG WITH FACE VALUE AND PREMIUM TO THE PREVIOUS BO ND HOLDERS ICICI SECURITY & FINANCE CO. ON CUM INTEREST PRICE BASIS. THE ASSESSING OFFICER FURTHER OBSERVED THAT ON THE DATE OF MATURITY, THE ASSESSEE RECEIVED AN AMOUNT EQUAL TO THE MATURITY VALUE OF THE BONDS .5.76 CRORES AND . 17.07 CRORES RESPECTIVEL Y. SINCE THE ASSESSEE HAS ALREADY PAID TO THE PREVIOUS BOND HOLDER, THE INTEREST FOR THE PERIOD UP TO THE DATE ON WHICH THE BONDS ARE PURCHASED, ONLY THE DIFFERENCE AMOUNT BETWEEN THE INTEREST RECEIVED BY THE ASSESSEE ON THE MATURITY DATE AND THE INTEREST PAID ON THE PURCHASE DATE BY THE ASSESSEE SHOULD BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE WHICH THE ASSESSEE HAS CORRECTLY SHOWN. THE ICICI LTD. WHILE REDEEMING THE BONDS HAS DEDUCTED TAX AT SOURCE ON THE MATURITY VALUE MINUS FACE VALUE WITHOUT RE COGNIZING THE PURCHASE PRICE OF THE ASSESSEE AS TABULATED BELOW: BOND I BOND II TOTAL MATURITY VALUE 5,76,27,397 17,07,49,315 LESS: FACE VALUE 5,00,00,000 15,00,00,000 PREMIUM PAID 9,55,000 10,80,000 INTEREST PAID 24,52,876.71 1,14,75,000 ACTUAL INTE REST RECEIVED WITH TDS 76,27,397 2,07,49,315 INTEREST INCOME TO THE ASSESSEE 51,44,521 92,74,315 INTEREST INCOME SHOWN BY THE ASSESSEE 41,89,520 81,94,315 DIFFERENCE INCOME 9,55,000 10,80,000 SINCE THE ASSESSEE HAS IGNORED THE PREMIUM PAID ON PURCHASE OF BONDS AND CLAIMED PREMIUM PORTION ALSO AS INTEREST, THE ASSESSING OFFICER HAS NOT ACCEPTED AND THEREFORE, THE DIFFERENCE OF INCOME PAYABLE OF .20,35,000/ - I.T.A. NO . 1 242 /M/ 15 5 WAS ADDED TO THE INCOME OF THE ASSESS EE UNDER THE HEAD INCOME FROM OTHER SOURCES . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING THE FACTS OF THE CASE, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS ALREADY PAID THE INTEREST COMPONENT OF .0.24 CRORES AND .1.14 C RORES ALONG WITH THE FACE VALUE AND PREMIUM ON THE DATE OF MATURITY, THE ASSESSEE HAS RECEIVED AN AMOUNT EQUAL TO THE IMMATURITY VALUE OF THE BONDS. SINCE THE ASSESSEE HAS ALREADY PAID INTEREST TO THE PREVIOUS BOND HOLDERS, THE DIFFERENCE AMOUNT BETWEEN TH E INTEREST RECEIVED BY THE ASSESSEE ON THE MATURITY DATE AND INTEREST PAID ON THE PURCHASE DATE BY THE ASSESSEE WAS TREATED AS INCOME IN THE HANDS OF THE ASSESSEE. FURTHER, WHILE REDEEMING THE BONDS, THE ICICI LTD. HAS ALSO DONE TDS ON THE MATURITY VALUE M INUS FACE VALUE. SINCE THE ASSESSEE HAS IGNORED THE PREMIUM PAID ON PURCHASE OF BONDS AND CLAIMED THE SAME ALSO AS INTEREST, THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT IT IS NOT AN ALLOWABLE EXPENDITURE. ACCORDINGLY, THE LD. CIT(A) SUSTAINED THE ADDITION MAD E BY THE ASSESSING OFFICER. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE GROUND TO CONSIDER AND TREAT THE PREMIUM PAID OF .20,35,000/ - AS PURCHASE COST OF THE BOND AND TO ALLOW DEDUCTION FROM THE MATURITY VALUE OF THE BOND. THIS ISSUE WAS NOT I.T.A. NO . 1 242 /M/ 15 6 RAISED BEFORE THE AUTHORITIES BELOW AND ACCORDINGLY, WE REMIT THE SAME TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 3 RD FEBRUARY , 2016 A T CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 03 . 0 2 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.