ASCENDAS PROPERTY FUND (FDI) PTE LIMITED,SINGAPORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION CIRCLE -1(1)(1), NEW DELHI

ITITA 210/DEL/2026Status: DisposedITAT Delhi25 September 2026AY 2017-1814 pages
AI SummaryAllowed

What were the facts?

The assessee, Ascendas Property Fund (FDI) Pte Limited, a Singapore-domiciled company, is a wholly-owned subsidiary of CapitaLand India Trust. It invests in Indian entities engaged in real estate development and property holding. For Assessment Years (AYs) 2017-18 and 2020-21, the assessee invested in Non-Convertible Redeemable Debentures (NCDs) issued by Indian entities, earning interest income. The assessee offered this income to tax under Section 115A read with Sections 194LC and 194LD of the Income-tax Act, 1961, at a concessional rate of 5.46%. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 read with Section 144C(13) of the Act, challenging the applicability of Sections 194LC and 194LD to NCDs. The AO's view was that debentures and rupee-denominated bonds are not interchangeable and that NCDs fall outside the scope of Section 194LD.

What did the Tribunal hold?

The Tribunal held that the grounds raised by the assessee deserved to be sustained. Regarding the addition of Rs. 6,46,76,004/- under Section 194LC, the Tribunal noted that the AO had made this disallowance in the draft assessment order but omitted it in the final assessment order, which only referred to Section 194LD. Therefore, the addition under Section 194LC could not be sustained. The Tribunal also referred to the decision in Amplus Energy Solutions Pte. Ltd., where a Coordinate Bench held that for the purpose of Section 194LD, what is important is that the security should be rupee-denominated, and the intention is to protect Indian companies from foreign exchange fluctuations. The distinction between different types of debentures (NCDs, CCDs, OCDs) was considered of no consequence as they are all debt instruments like bonds. The Tribunal found that the AO had erred in not extending the benefit of Section 194LD to NCDs. Consequently, the appeals of the assessee were allowed.

What were the issues?

1. Whether interest income earned by the assessee on Non-Convertible Redeemable Debentures (NCDs) issued by Indian entities is taxable under Section 115A read with Section 194LD of the Income-tax Act, 1961, at the concessional rate of 5%. Assessee's Contention: The assessee argued that NCDs are debt instruments, and in the absence of a specific definition for 'bond' and 'debenture' in the Act, they should be considered interchangeable. Reliance was placed on the Delhi Bench decision in Heidelberg Cement AG Vs. ACIT, International Taxation (2022) and the definition of 'interest' and 'interest on securities' under Sections 2(28A) and 2(28B) of the Act. The assessee also referred to a letter from the Principal Commissioner of Income Tax (International Taxation) suggesting that 'bond' under Section 194LD includes debentures. Revenue's Contention: The revenue, through the CIT DR, argued that debentures and rupee-denominated bonds cannot be used interchangeably. The AO relied on RBI circulars and SEBI (FPI) Regulations, 2014, to distinguish between bonds and NCDs, contending that NCDs are out of the purview of Section 194LD and 194LC. The revenue also highlighted that the AO's view on the applicability of Section 194LD was challenged before the Hon'ble Punjab and Haryana High Court in the Heidelberg Cement AG case, and that RBI notifications were not considered in that decision.

Which sections of the Income-tax Act were involved?

Section 115A,Section 194LC,Section 194LD,Section 147,Section 144C(13),Section 2(28A),Section 2(28B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI KRINWANT SAHAY

For Respondent: Dr. Shalini Verma, CIT DR
Pronounced: 25.09.2026

PER SHRI ANUBHAV SHARMA, JUDICIAL MEMBER:

These appeals preferred by the Assessee against the order dated 02.01.2026 passed by the Ld. Assistant Commissioner of Income Tax, Circle, International Taxation -1(1)(1), Delhi (hereinafter referred to as ‘the ld.

ITITA 210& 211/DEL/2026 ASCENDAS PROPERTY FUND (FDI) PTE LIMITED

The order continues below.

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