Jennys Hotel Pvt. Ltd., Trichy V. DCIT, Trichy

MA 54/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1743 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH
• Assessee Lawyers: B RAMAKRISHNAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . , .. , ' BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY, JUDICIAL MEMBER MISCELLANEOUS PETITION NOS.50 & 51, 52 & 53, 54/CHNY /2018 (IN ITA NOS.1543 & 1544/CHNY/2012, ITA NOS.1349 & 1350/CHNY/2014, ITA NO.1657/CHNY/201 5) #$ $ /ASSESSMENT YEARS: 2007-08 TO 2011-12 M/S.JENNYS HOTEL PVT. LTD., NO.3/14, MCDONALDS ROAD, CONTONMENT, TRICHY-620 001. VS. THE ACIT/DCIT, COMPANY CIRCLE-I TRICHY. [PAN: AABCJ 1281 G ] ( ' /APPELLANT) ( ()' /RESPONDENT) ITA NOS.1543 & 1544/CHNY/2012, ITA NOS.1349 & 1350/CHNY/2014, ITA NO.1657/CHNY/2015 #$ $ /ASSESSMENT YEARS: 2007-08 TO 2011-12 THE ACIT/DCIT, COMPANY CIRCLE-I TRICHY. VS. M/S.JENNYS HOTEL PVT. LTD., NO.3/14, MCDONALDS ROAD, CONTONMENT, TRICHY-620 001. [PAN: AABCJ 1281 G ] ( ' /APPELLANT) ( ( )' /RESPONDENT) ASSESSEE BY : MR.B.RAMAKRISHNAN, CA DEPARTMENT BY : MR.R.CLEMENT RAMESH, ADDL.CIT * /DATE OF HEARING : 02.11.2018 * /DATE OF PRONOUNCEMENT : 08.11.2018 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THESE MISCELLANEOUS PETITIONS NOS.50 TO 54 OF 2018 ARE FILED BY THE ASSESSEE SEEKING RECTIFICATION OF THE ERRONEOUS COM PUTATION WITH RESPECT TO AMORTIZATION OF SHARE PREMIUM THAT HAS CREPT INT O THE ORDER OF THE MP NOS.50 TO 54/CHNY/2018 & ITA NOS.1543 & 1544/CHNY/2012 ITA NOS.1349 & 1350/CHNY/2014 & ITA NO.1657/CHNY/2015 :- 2 -: TRIBUNAL DUE TO SOME ERRORS IN THE ORDERS OF THE RE VENUE. FURTHER THE ASSESSEE HAD MADE THE FOLLOWING SUBMISSIONS: IT WOULD BE PERTINENT TO NOTE THAT A COMMON ISSUE FOR ALL THE IMPUGNED YEARS IS RESPECT OF WHICH THE REVENUE HAD FILED ITS APPEAL AND THE PETITIONER HAD FILED ITS CROSS OBJECTION IS IN RELATION TO THE DEDUCTION WITH RESPECT TO AMORTIZATION OF PREMIUM O N DEBENTURES. IN THIS CONNECTION, THE DETAILS OF THE ISSUE OF 67, 500 DEBENTURES TO M/S.EXIM RAJATHI PVT. LTD. ARE AS FOLLOWS: PARTICULARS AMOUNT (RS.) ISSUE PRICE / FACE VALUE PER DEBENTURE 1,000 REDEMPTION PRICE PER DEBENTURE 4,000 PREMIUM PER SHARE 3,000 THEREFORE, THE PREMIUM ON REDEMPTION OF 67,500 DEB ENTURES IS AS FOLLOWS: PARTICULARS AMOUNT (RS.) REDEMPTION VALUE (67,500 X RS.4,000/-) 27,00,00,000 LESS: ISSUE VALUE (67,500 X RS.1 ,000/-) 6,75,00,00 0 PREMIUM ON REDEMPTION 20,25,00,000 THE PREMIUM OF RS.20,25,00,000/- HAS BEEN AMORTIZED BY THE PETITIONER OVER A PERIOD OF DEBENTURES I.E. 10 YEARS. THEREFORE, THE PETITIONER AMORTIZED RS.2,02,50,000/- (20,25,00,000/10 = RS.2,02,50,000/-) EVERY YEAR FOR A PERIOD OF 10 YEA RS AND CLAIMED THE SAME AS DEDUCTION. THE HONBLE BENCH IN DECIDING THIS ISSUE IN ITS ORD ER DATED 18.01.2018 HAS HELD AS FOLLOWS (PARA 12.3 AT PAGE 17): IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS RECE IVED RS. 6,25,00,000/- FROM M/S.EXIM RAJATHI PVT. LTD., TO ACQUIRE 67,500 DEBENTURES HAVING FACE VALU E OF RS.3000/- PER DEBENTURE TO BE REDEEMED AFTER THE EXPIRY OF 10 YEARS. THEREFORE THE ASSESSEE HAS TO RE-PAY RS.20,25,00,000/- (67500 X 3000) ON REDEMPTION OF DEBENTURES AT THE END OF THE 10 TH YEAR. THEREFORE THE INTEREST / FINANCIAL CHARGE / PREMIUM ON AMORTIZATION ETC., AS THE CASE MAY BE, W ORKS OUT TO RS. 14 CRORES (20,25,00,000 6,25,00,000). THIS COST HAS TO BE SPREAD OVER FOR T HE PERIOD OF DEBENTURES AS HELD BY THE HONBLE APEX COURT IN THE CASE MADRAS INDUSTRIAL CORPORATION LIM ITED CITED SUPRA. HENCE THE ALLOWABLE DEDUCTION FOR THE RELEVANT ASSESSMENT YEARS INCLUDING THE ASSESSM ENT YEAR 2007-08 WOULD BE RS.1,40,00,000/- (RS. 1,40,00,000/10). HENCE, WE HEREBY DIRECT THE LD.AO TO GRANT THE DEDUCTION OF RS.1,40,00,000/- IN THE RELEVANT ASSESSMENT YEAR TOWARDS THE INTEREST / FIN ANCIAL CHARGE / PREMIUM ON AMORTIZATION ETC., AS THE CASE MAY BE, ON DEBENTURES REDEEMABLE AFTER THE PERIOD OF YEARS. IN THIS CONNECTION, THE PETITIONER MOST HUMBLY SUBM ITS THE FOLLOWING: 1. IT HAS BEEN STATED THAT THE PETITIONER RECEIVED RS.6,25,00,000/- FROM M/S.EXIM RAJATHI PVT. LTD. TO ACQUIRE 67,500 DEBENTURES. HOWEVER, THE PETITIONER HAD RECEIVED RS.6,75,00,000/- AS CONSIDERATION FOR THE 67,500 DEBENTURES ISSUED TO M/S.EXIM RAJATHI PV T. LTD. (PLEASE REFER PAGES 2 & 3; PARAS I & 2 OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) DATED 04.05.2012 FOR THE ASSESSMENT YEAR 2007-08). 2. THE FACE VALUE OF THE DEBENTURES HAS BEEN STATED AS RS.3,000/- PER DEBENTURE. HOWEVER, PETITIONER HAD ISSUED THE DEBENTURES AT A FACE VALUE OF RS.1,0 00/- AND REDEMPTION PRICE IS RS.4,000/- PER DEBENTURE. THEREBY, THE PREMIUM ON DEBENTURE IS RS. 3,000/- PER DEBENTURE. (PLEASE REFER PAGES 2 & 3; PARAS I & 2 OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 04.05.2012 FOR ASSESSMENT YEAR 2007-0 8) THEREFORE, THE PREMIUM TO BE AMORTIZED WOULD BE RS. 2,02,50,000/- AS CLAIMED BY THE PETITIONER AND NOT RS.1,40,00,000/- AS STATED BY THE HONBLE TRIBU NAL IF: THE REDEMPTION PRICE OF RS.4,000/- PER DEBENTURE IS CONSIDERED INSTEAD OF RS.3,000/- PER DEBENTURE, THEREBY MAKING THE REDEMPTION VALUE TO BE RS.27,00, 00,000/- AS AGAINST RS.2,02,50,000/-. THE ISSUE VALUE IS CONSIDERED TO BE RS.6,75,00,00 0/- (67,500 X RS.1,000/-) INSTEAD OF RS.6,25,00,000/- MP NOS.50 TO 54/CHNY/2018 & ITA NOS.1543 & 1544/CHNY/2012 ITA NOS.1349 & 1350/CHNY/2014 & ITA NO.1657/CHNY/2015 :- 3 -: WHILE THE HONBLE TRIBUNAL HAS UPHELD THE METHOD AD OPTED BY THE PETITIONER, THE DIFFERENCE IN THE PETITIONERS CLAIM AND THE HONBLE TRIBUNALS DIREC TION HAS ARISEN PURELY BECAUSE OF THE VARIATION IN THE FIGURES ADOPTED BY THE HONBLE BENCH AS MENTIONED A BOVE. SINCE THE ABOVE MENTIONED MISTAKES ARE APPARENT FRO M RECORD, IT IS MOST HUMBLY PRAYED THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO RECTIFY THE SAME ARISING FROM THE COMBINED ORDER OF THE HONBLE TRIBUNAL FOR THE ASSESSMENT YEARS 2007-08 TO 2011-1 2 DATED 18.01.2018 AND THEREBY ALLOW THE PETITIONERS CLAIM OF AMORTIZATION OF PREMIUM ON DE BENTURES. THE PETITIONER ALSO PRAYS FOR A CONDONATION OF ANY DELAY THAT MAY HAVE OCCURRED IN THE FILING OF THIS PETITION. THE PETITIONER UNDERTAKES TO PRODUCE ALL THE NECESSARY MATERIAL BEFORE THE HONBLE TRIBUNAL FOR IT TO DECIDE THE MATTER ON MERITS, IF THIS PETI TION IS ALLOWED. 2. ACCORDINGLY THE LD.AR PLEADED THAT THE COMPUTATI ON MISTAKE IN THE ORDER OF TRIBUNAL MAY BE RECTIFIED. THE LD.DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE LD.AR. 3. AFTER HEARING BOTH SIDES, WE ARE OF THE CONSIDER ED VIEW THAT THE FACTUAL ASPECTS WITH RESPECT TO THE COMPUTATION OF THE SHARE PREMIUM POINTED OUT BY THE ASSESSEE ARE REQUIRED TO BE VERI FIED BY THE LD.AO. THEREFORE, IN THE INTEREST OF THE JUSTICE WE HEREBY RECALL THE ORDER OF THE TRIBUNAL (FOR THE AYS 2007-08 TO 2011-12 IN ITA NOS .1543 & 1544/CHNY/2012, ITA NO.1349 & 1350/CHNY/2014 AND IT A NO.1657/CHNY/2015) WITH RESPECT TO THE COMPUTATION ASPECT OF THE SHARE PREMIUM THAT IS TO BE AMORTIZED. FURTHER, WE HEREB Y DISPOSE OF THOSE APPEALS OF THE REVENUE WITH DIRECTIONS TO THE LD.AO TO VERIFY AND RECTIFY THE COMPUTATION OF SHARE PREMIUM THAT IS REQUIRED T O BE AMORTIZED IN ACCORDANCE WITH THE METHOD DECIDED BY THE TRIBUNAL IN ITS EARLIER ORDER DATED 18.01.2018. IT IS ORDERED ACCORDINGLY. MP NOS.50 TO 54/CHNY/2018 & ITA NOS.1543 & 1544/CHNY/2012 ITA NOS.1349 & 1350/CHNY/2014 & ITA NO.1657/CHNY/2015 :- 4 -: 4. IN THE RESULT, ALL THE MISCELLANEOUS PETITIONS F ILED BY THE ASSESSEE ARE ALLOWED AND ALL THE APPEALS OF THE REVENUE MENTIONE D HEREIN ABOVE ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREI N ABOVE. ORDER PRONOUNCED ON THE 8 TH DAY OF NOVEMBER, 2018 IN CHENNAI. SD/- SD/- ( . . ) ( DUVVURU R.L.REDDY ) # 1 /JUDICIAL MEMBER ( . ) ( A. MOHAN ALANKAMONY ) 1 /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: NOVEMBER 08, 2018. TLN * (#45 65 /COPY TO: 1. ' /APPELLANT 4. 7 /CIT 2. ()' /RESPONDENT 5. 5 (## /DR 3. 7 ( ) /CIT(A) 6. $ /GF