TaxTMI 
TaxTMI 
2026 (9) TMI 1638
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....order, the Tribunal upheld the revisionary order dated 21.12.2023, issued by the Principal Commissioner of Income Tax (PCIT), Coimbatore-1, under Section 263 of the Act. 2. The present appeal, according to this court, proposes the following four substantial questions of law centering on whether the PCIT validly invoked Section 263 of the Act to set aside a reassessment order passed under Section 147 read with Section 144B of the Act: i. Whether the Appellate Tribunal was justified in upholding the revisionary jurisdiction exercised by the PCIT under Section 263 of the Act, despite the Assessing Officer having accepted the appellant's explanations during reassessment proceedings? ii. Whether the Appellate Tribunal er....
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....es, the breakdown stood as follows: Initial Face Value: Rs. 1,00,12,000/- Total Accumulated Interest (2.9.2009 to 30.9.2012): Rs. 75,46,082/- Total Allotment Value of Equity Shares: Rs. 1,75,58,082/- 3.3. During FY 2012-13, SMJPL deducted Tax Deducted at Source (TDS) on the interest portion of Rs. 12,23,689/- accruing for that specific financial year. In her return of income for AY 2013-14, the appellant reported total interest income of Rs. 13,48,913/- (reflecting the single-year accrued interest grossed up for TDS) and claimed full credit for the TDS deducted by SMJPL. However, she did not offer the balance accumulated interest of Rs. 61,97,169/- (accrued across FY 2009-10 to FY 2011-12) to tax. 3.4. The A....
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....uity shares realized the accrued interest value, that claiming full TDS credit while omitting the underlying accumulated interest was legally unsustainable, and that the revision under Section 263 of the Act was valid. 3.7. It is seen from the records that the appellant had subsequently filed an application to rectify the order dated 5.11.2024 and the same was allowed by expunging the observation in the order dated 5.11.2024 to the following effect: "However, here is question is of taxability of interest component of debenture that has accrued to the assessee up-to the date of conversion." 4.1. Learned counsel appearing on behalf of the appellant submitted that the Assessing Officer made detailed inquiries during the reassessment proc....
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....he zero-coupon debentures carried an implicit interest component payable upon redemption or settlement. Upon premature conversion on 30.9.2012, SMJPL discharged its obligation by issuing equity shares worth Rs. 1,75,58,082/-, which explicitly included Rs. 75,46,082/- towards accumulated interest. By accepting equity shares representing this accumulated interest, the appellant received economic value satisfying the debt. 8. The appellant's reliance on the cash system of accounting under Section 145 of the Act cannot defer tax liability when an asset of clear monetary value (equity shares) is received in discharge of accrued interest. Receipt of income need not take the form of physical cash; settlement through allotment of valuable sh....