M/s. Nitesh Housing Developers Private Limited, Bangalore V. Deputy Commissioner Of Income Tax, Circle- 5(1)(2), Bangalore

ITA 1487/BANG/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7517 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMER SINGH MEENA
• Assessee Lawyers: V. SRINIVASAN
• Keywords: Depreciation; Revenue expenditure
• Section: 234B; 13

Judgement Text

ITA No.1487/Bang/2019 M/s. Nitesh Housing Developers Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No.1487/Bang/2019 Assessment Year: 2012 – 13 M/s. Nitesh Housing Developers Pvt. Ltd. Nitesh Time Square 7 th Floor, #8, M.G. Road Bengaluru 560 001 PAN NO : AACCN6510F Vs. Deputy Commissioner of Income-tax Circle-5(1)(2) Bengaluru APPELLANT RESPONDENT Appellant by : Shri V. Srinivasan, A.R. Respondent by : Shri Sumer Singh Meena, D.R. Date of Hearing : 14.07.2022 Date of Pronouncement : 14.07.2022 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of CIT(A) dated 25.3.2019. The assessee has raised following grounds of appeal:- 1 “The o rde rs of the au thoritie s below in so fa r as the y are ag ainst the appellant are oppo se d to law , e quity , weight of evidence probab ilities, facts and circum stanc es of the appellant's c ase. 2. The le arned CIT[A] is not justifie d in upholding the disallowan ce of R s.28,90,07, 189/- be ing the prov ision made for interest on debe ntures th at w as allowable in te rms o f sec tion ITA No.1487/Bang/2019 M/s. Nitesh Housing Developers Pvt. Ltd., Bangalore Page 2 of 4 36 [1][iii] of the A ct under the fa cts and in the c ircum stanc es of the ap pellant's case. 3. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s 234B and 234C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 4. For the abov e and other grounds that may be urged at the time of he aring of the appellant, y our appellant humbly prays that the appeal may be allowed and justic e rendered and the appellant may be warded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the co sts.” 2. There was a delay of 23 days in filing the appeal before this Tribunal which was explained by the assessee by way of affidavit that th assessee was going through severe financial crisis for the past few years, as a result of which there is a failure to take steps to file this appeal. In our opinion, this is good and sufficient reason to file this appeal belatedly. Accordingly, the delay of 23 days is condoned and appeal is admitted for adjudication. 3. After hearing both the parties, we are of the opinion that similar view came for consideration before this Tribunal in ITA No.60/Bang/2016 dated 13.1.2017 in which the Tribunal has held as under:- “6. We heard rival submissions and perused the material on record. The issue that arises for consideration is whether the proportionate premium on redemption of debentures is allowable as deduction. There is no quarrel about the proposition that premium paid on redemption of debentures is revenue expenditure and allowable proportionally during the period of debenture. But the issue requires to be examined with reference to terms of share subscription agreement. Whether the terms of contract or agreement entered into by the respondent-assessee-company with its investor i.e. HDFC Asset Management Co. Ltd., and other promoters provide for payment of any premium on redemption or not, the onus lies on the assessee to prove that the liability for expenditure crystallized during the year under consideration and ITA No.1487/Bang/2019 M/s. Nitesh Housing Developers Pvt. Ltd., Bangalore Page 3 of 4 this has to be determined with reference to terms of agreem ent entered into at the time of allotting debentures. In the present case, the original agreement of OaT - 13 subscription or debentures had undergone changes twice first on 15/5/2010 and second on 12/11/2012. It is only pursuant to second addendum dated 12/11/2012 that the debentures were redeemed into preference shares at a premium yielding rate of IRR of 26% of the subscription amount. The original terms of debenture subscription agreement holds good during the previous year relevant to assessment year under consideration, in terms of which, it cannot be said that there was a definite liability towards premium on redemption of debentures as it is dependent on the following two conditions: i Completion of IPO, and ii. Exercise of option of converting debentures into preference shares of the investors i.e. HDFC Asset Management Co. Ltd., It is only vide second addendum dated 12/11/2012 it was agreed that debentures were to be redeemed at a premium into preference shares which is beyond the accounting year under consideration. Therefore, it cannot be said that liability for premium had crystallized. Furthermore, investor is also interested in respondent-assessee- company as it holds 10% of the shares of the respondent-assessee- company. In light of this fact, there is possibility that the terms of original purchase agreement had been changed to suit convenience of parties and it is only a make belief story in order to make claim for depreciation on account of premium paid on redemption of debentures. Therefore, the claim for deduction of proportionate amount of premium on redemption of shares is not allowable in the year under consideration as the liability neither crystalized nor genuineness of the transaction was not proved beyond doubt. The CIT(A) had not looked into aspect of genuineness of the second addendum entered by the respondent assessee company with investor HDFC Asset Management Co. Ltd. Therefore, the finding of the CIT(A) cannot stand the test of law and cannot be upheld. 7. In the result, the appeal filed by the revenue is allowed.” 4. In view of the above order of Tribunal, we inclined to dismiss this appeal on similar lines. ITA No.1487/Bang/2019 M/s. Nitesh Housing Developers Pvt. Ltd., Bangalore Page 4 of 4 5. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 14 th Jul, 2022 Sd/- (Beena Pillai) Judicial Member Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 14 th Jul, 2022. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.