TaxTMI 
TaxTMI 
2026 (6) TMI 872
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....'s income at Rs. 175,11,36,310 by making an addition of Rs 6,35,79,070; Grounds of Appeal Nos. 2 to 7: Legal Arguments DRP directions issued in contravention to Circular No. 19/2019 dated 14 August 2019 2. erred in treating the directions under section 144C of the Act which manually mentioned the Document Identification Number thereon as valid and passing the order under section 143(3) read with section 144C(13) of the Act which is in contravention to the Circular No. 19/ 2019 dated 14 August 2019 issued by the Central Board of Direct Taxes and therefore the same is bad in law and ought to be quashed; Validity of the order passed beyond the period of limitation prescribed under section 153 of the Act 3. erred in passing the final assessment order under section 143(3) read with section 144C(13) of the Act on 26 July 2023 which is beyond the time limit prescribed under section 153 of the Act and hence time barred and liable to be quashed; Validity of proceedings concluded in absence of a valid notice under section 143(2) of the Act 4. erred in completing the assessment under section 143(3) read with section 144C(13) o....
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....ounds of Appeal Nos. 12 and 13: Levy of interest under section 234A and 234B of the Act 11 erred in in levying interest under section 234A of the Act amounting to Rs. 10,75,756, 12. erred in levying interest under section 234B of the Act amounting to Rs 1,07,57,560, Ground of Appeal No. 14: Initiation of penal proceedings under section 270A of the Act 13. erred in initiating penalty proceedings under section 270A of the Act on account of alleged under-reporting of income. The Appellant craves leave to add, alter, vary, omit, substitute or amend any or all of the above grounds of appeal, at any time before or at, the time of the appeal, so as to enable the Hon'ble Income-tax Appellate Tribunal to decide this appeal according to law. For Macquarie SBI Infrastructure Investments Pte. Limited" 2.1 At the outset, the Ld. AR submitted that Ground Nos. 2 to 6 are not being pressed. The same has also been communicated by the assessee vide letter dated 23.03.2026, which is taken on record. Accordingly, Ground Nos. 2 to 6 are dismissed as not pressed. Further, Ground Nos. 12 and 13 are consequential in nature and, therefore, do not require ....
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....s. 1,14,20,79,361/- was earned. The assessee had shown interest upto 30.06.2019 of Rs. 1078500291/- as interest income taxable under the head 'Income from other Sources' as the same had been credited by the GAL. With regard to the broken period interest of 5 days (amounting to Rs. 6,35,79,070/-) the assessee claimed the same as capital gain since it had not been paid by the GAL but by the buyer namely JPMSA to whom these debentures had been sold cum-interest. Since the amount is not paid by the issuer of debentures but by the buyer, hence it cannot be taxed as interest income. 5. Ld. DR, on the other hand has argued that the interest completed as debentures sold, for the broken period of 6 days, comes exactly to Rs. 6,35,79,070/-. Merely because the same has been received from JPMSA world, no change the character of receipts from interest to capital gains. In support of his contentions, the Ld. DR has relied on the following decisions: (i) Nitesh Housing Developers (P) Ltd. vs. DCIT [2022] 145 taxmann.com 30 (Kar.). The relevant extract of the said order is reproduced as under: "... 10. It is also not in dispute that 62 Lakh convertible Debentures with....
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....iability to pay larger amount than what it has borrowed. The assessee Company has made provision for payment of premium and also paid TDS. The adverse finding recorded by the ITAT that the parties had changed the agreement to suit their convenience and that it is a 'make-believe' story is not supported by any cogent reason nor material on record and therefore, untenable. 13. Shri. Shankar has placed reliance on Bharat Earth Movers v. CIT [2000] 112 Taxman 61/245 ITR 428/162 CTR 325 (SC) wherein, it is held as follows: "4. The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is no....
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....f DDB, the face value of the bonds is discounted by applying a particular interest rate, so that the maturity proceeds equal to the face value. On the contrary, in the case of NCDs redeemable at premium, the premium amount is determined by applying a particular interest rate. Thus, both the amount of discount and the amount of premium, in effect, are "interest amounts" only. Hence, the companies issuing both types of bonds/debentures usually claim discount/premium as interest expenditure and their claim has been allowed. 20. We think that there is no dispute with regard to the fact that the "Debentures" fall under the category of "Capital asset" under the Income tax Act. In this regard, the Ld A.R took us to sec.50AA of the Income tax Act, wherein the gains arising on sale/redemption of certain kinds of debentures is stated to be taxable as short term capital gain. We notice that section 50AA is applicable to a case of "market linked debentures" (MLD). In case of Market linked debentures, the interest rate payable on them is no determined at the time of issuing them. Instead, the return on those market linked instruments is determined on the basis of performance of an unde....
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....bentures are redeemable at the end of the tenure. A debenture holder is entitled to receive interest as per agreed terms and the principal amount upon its maturity. He does not have right to receive anything extra and cannot have any right over the surplus arising on liquidation of company. Thus the shares carry more right over and above its face value, while the debentures do not carry such kind of rights. Hence, "shares" and "debentures" stand on different footing. In our view, the decisions with regard to redemption of preference shares and reduction of capital in case of equity shares have been rendered considering the rights and liabilities attached to shares. Hence, in our view, the ratio of decisions rendered in the case of equity shares/preference shares cannot be applied to debt instruments. We notice that the decision in the case of Mrs. Perviz Wang Chuk basi (supra) was related to Capital investment Bond issued by Government of India and not the case of debenture issued on private placement basis. Accordingly, the redemption of debentures is nothing but repayment of debt and the same, in our view, cannot fall under the category of "extinguishment" as interpreted by the C....
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....CDs in the open market. The assessee has only surrendered the NCDs to the SPVs, viz., M/s Bhishma Realty Ltd and M/s Capricorn Realty Ltd, for redemption. Thus, it is a case of realization of money advanced by a creditor, since debentures are debt instruments only. Thus, the question of generation of capital gains will not arise, when the debentures are redeemed by the issuing companies. Further, what is received by the assessee in the form of premium is nothing but interest income only. Accordingly, we are of the view that the Ld CIT(A) was legally correct in holding that the premium/surplus received by the assessee is interest income assessable under the head Income from Other Sources. 24. We noticed earlier, the cost of purchase of debentures to the assessee was Rs. 373.47 lakhs and the redemption value was Rs. 649.97 lakhs. Hence the actual interest that has accrued to the assessee was Rs. 276.50 lakhs only. Accordingly, we modify the order passed by Ld CIT(A) and direct the AO to assess the above said interest income of Rs. 276.50 lakhs only." 5.1 The Ld. DR also referred to the decision of the Hon'ble Apex Court in the case of Taparia Tools Ltd. vs. JCIT, [2015] 5....
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.... years treating it as deferred interest payment, perhaps the AO would have been right in accepting the same in consonance with the accounting treatment which was given. However, learned counsel pointed out that in the instant case the assessee had filed the income tax return claiming the entire deduction which was allowable to it under the provisions of Section 36(1)(iii) of the Act as all the conditions thereof were fulfilled and, thus, it was exercising the statutory right which could not be denied. ..... 18. What follows from the above is that normally the ordinary rule is to be applied, namely, revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the IT Department cannot deny the same. However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied, which upto now has been restricted to the cases of debentures. 19. In the instant case, as noticed above, the assessee did not want spread over of this expenditure over a period of five y....