Tribunal upholds interest claim deletion, finding accrual and crystallization.

The Tribunal upheld the deletion of the disallowance of interest payable claimed by the assessee. It found that the interest had accrued and the liability had crystallized based on the loan agreement terms and provisions of Section 43B(d) of the Income Tax Act. The Tribunal emphasized that the interest had accrued and rejected the Revenue's argument that it had not crystallized in the relevant year. As there were no distinguishable features in a previous order, the Tribunal dismissed the Revenue's appeal and the assessee's cross-objection as infructuous.

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Issues:
Disallowance of interest payable claimed by Revenue

Analysis:
The appeal and cross-objection were directed against the order of the Commissioner of Income Tax (Appeals). The Revenue challenged the deletion of the disallowance of interest payable. The Tribunal considered a similar issue in the assessee's case for a previous assessment year and held that the interest had accrued and the liability had crystallized. The Tribunal referred to the loan agreement terms and the provisions of Section 43B(d) of the Income Tax Act. The Tribunal emphasized that the interest amount had accrued and the liability had crystallized, rejecting the Revenue's argument that the interest had not been crystallized in the relevant year.

The Tribunal noted that the interest was to be paid quarterly in arrears as per the loan agreement terms, and any interest not paid would be accrued as arrears and added to the principal outstanding. The Tribunal highlighted that the loan agreement clearly indicated that interest had accrued and the payment was postponed. The Tribunal also discussed the definition of Public Financial Institution as per the Companies Act, emphasizing that neither the Government of Tamil Nadu nor Infrastructure Leasing & Financial Services Ltd. IL&FS fell within this definition. Therefore, the Tribunal concluded that the Commissioner of Income Tax (Appeals) erred in applying Explanation 3(c) of Section 43B(d) and held in favor of the assessee.

The Tribunal found no distinguishable features in the previous order and confirmed the Commissioner of Income Tax (Appeals) decision. Consequently, the Tribunal dismissed the appeal of the Revenue and the cross-objection filed by the assessee as infructuous. The orders were pronounced in Chennai on April 8, 2015.

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