2016 (3) TMI 633

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....-. The assessee has also raised an alternative plea that the premium paid be treated as purchase cost of the bond and deducted from the maturity value of the bond and should treated as allowable expenditure. 2. Brief facts of the case are that the assessee is engaged in the promotion of Information Technology Park and filed 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, the 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....

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....e 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 Rs. 5 crores for Rs. 5.34 crores and bonds worth of Rs. 15 crores for Rs. 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 purchase (Rs.) Pre....

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....20 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 Rs. 20,35,000/- was added to the income of the assessee 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 Rs. 0.24 crores and Rs. 1.14 crores 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....