DCIT 5(2)(1), MUMBAI V. LITOLIER PROPERTIES HOLDINGS P.LTD, MUMBAI

ITA 3217/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1284 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 10-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Court: TRIBUNAL
• Department Lawyers: VIKASH KUMAR AGARWAL
• Assessee Lawyers: SHRI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY , JM ITA NO. 3217 / MUM/20 1 6 ( ASSESSMENT YEAR : 2011 - 12 ) DCIT 5(2)(2), MUMBAI 400 020 VS. M/S. LITOLIER PROPERTIES HOLDINGS PVT. LTD., ABHAY C HAMBERS, 131, AUGUST KRANTI MARG, KEMPS CORNER, MUMBAI 400 036 PAN/GIR NO. AAACL0610N APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI VIKASH KUMAR AGARWAL ASSESSEE BY SHRI PANKAJ R TOPRANI ALONGWITH MS. KRUPA P TOPRANI DATE OF HE ARING 10 / 04 /201 7 DATE OF PRONOUNCEME NT 10 / 04 / 201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 10, MUMBAI DATED 26/01/2016 FOR THE A.Y.2011 - 12, WHEREIN REVENUE IS AGGRIEVED FOR DELETING DISALLOWANCE OF DEEP DISCOUNTING CHARGES WRITTEN OFF AGAINST RENT INCOME. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. T HE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF LETTING OUT OF CO MMERCIAL PREM ISES. IN THE COURSE OF SCRUTINY ASSESSMENT, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.1,03,00,000/ - BEING DISCOUNTING CHARGES ON DEBENTURES WRITTEN OFF AGAINST RENT RECEIVED BY THE ASSESSEE. SINCE ITA NO. 3217/MUM/2016 M/S. LITOLIER PROPERTIES HOLDINGS PVT.LTD., 2 DISCOUNTING CHARGES ON DEBE NTURES WRITTEN OFF IS NOT COVERED BY PROVISIONS U / S 24 (B) OF THE ACT, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED BY THE A O WHY SUCH CLAIM SHOULD NOT BE DISALLOWED. THE ASSESSEE HAS SUBMITTED ITS EXPLANATION BUT THE A O DID NOT ACCEPT THE CON TENTIONS OF THE ASSESSEE. THE ASSESSEE COMPANY ISSUED 4,00,000 DEEP DISCOUNT DEBENTURES TO THE DIRECTOR AGAINST THE LOAN AMOUNT OF RS.4 CRORES ON FACE VALUE OF RS.4 00 / - PER DEBENTURE (ISSUE PRICE - R S .100 PER DEBENTU RE), REDEMPTION AT PAR AFTER 9 1/2 YEARS. THE ASSESSEE HAS NOT ASSIGNED ANY REA SON TO ADOPT THE VALUE OF RS.400 / - PER DEBENTURE AS AGAINST THE FACE VALUE OF R S .100/ - OF THE DEBENTURE. THE ASSESSEE HAS CLAIMED PROPORTIONATE DISCOUNT INCLUDING CUMULATIVE INTEREST OF R S.1 ,03,0 0,000/ - ON ACCOUNT OF DISCOUNTING CHARGES ON DEBENTURES WRITTEN OFF, WHEREAS THE DIRECTOR, MR. ASHOK MITTAL TO WHOM THE DEBENTURES HAVE BEEN ISSUED HAS NOT CREDITING THE SAME IN HIS ACCOUNT. THE AO ALSO POINTED OUT THAT NO INTEREST WAS PAYABLE BY THE ASSES SEE COMPANY DURING THE YEAR UNDER CONSIDERATION. IN FACT, THE LIABILITY TO PAY INTERE ST SHALL ARISE ONLY ON THE MATURITY OF THE DEEP DISCOUNT DEBENTURE. HENCE, THE CLAIM OF THE ASSESSEE WAS NOT ALLOWABLE U/S.24(B) OF THE I.T. ACT. 4. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM AFTER OBSERVING AS UNDER: - 4.2. I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS MADE BY THE LEARNED AR. FROM THE DETAILS FILED IT IS EVIDENT THAT THE DISCOUNTING CHARGES ON DEEP DISCOUNT DEBENTURES WERE TREATED ON PAR WITH INTEREST AND WERE ALLOWED UNDER SECTION 24 (B) OF THE ACT BY CIT(A), ITAT AND THE JURISDICTIONAL HIGH COURT IN APPELLANT'S OWN CASE FOR EARLIER YEARS. THE LEARNED AR HAS ALSO SUBMITTED THE COPIES OF THE ITA NO. 3217/MUM/2016 M/S. LITOLIER PROPERTIES HOLDINGS PVT.LTD., 3 DECISIONS OF THE ABOVE AUTHORITIES. AS PER THESE DECISIONS DISCOUNTING CHARGES ON DEEP DISCOUNTING DEBENTURES ARE ALLOWED TO BE CLAIMED UNDER SECTION 24(B) OF THE ACT. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS THE GROUND IS ALLOWED FOR TH E PRESENT ASSESSMENT YEAR ALSO. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ISSUE UNDER CONSIDERATION IS COVERED BY THE DECISION OF ITAT FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03, 2005 - 06, AND 2007 - 08. WE ALSO FOUND THAT ORDER OF THE TRIBUNAL WAS CONFIRMED BY THE HONBLE BOMB AY HIGH COURT VIDE ITS ORDER DATED 03/12/2014 FOR A.Y. 2006 - 07 AND VIDE ORDER DATED 05/08/2011 AND 02/03/2012 FOR THE A.Y.2005 - 06. WE ALSO FOUND THAT IN THE A.Y. 2008 - 09 AND 2009 - 10 ALSO THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESS EES FAVOUR VIDE ORDER DATED 17/03/2017. DURING THE YEAR UNDER CONSIDERATION, CIT(A) HAS ALLOWED COMPENSATION PAID FOR DELAY IN RE DE MPTION OF DEBENTURE WHICH IS ALSO REVENUE IN NATURE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL VIS - - VIS BOMBAY HI GH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 / 04 /2017 S D/ - ( SA KTIJIT DEY ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 21 / 04 /201 7 KARUNA SR. PS ITA NO. 3217/MUM/2016 M/S. LITOLIER PROPERTIES HOLDINGS PVT.LTD., 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//