DCIT 5(2)(1), MUMBAI vs. LITOLIER PROPERTIES HOLDINGS P.LTD, MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M): This appeal is filed by the Revenue against the order of CIT(A)- 10, Mumbai dated 26/01/2016 for the A.Y.2011-12, wherein Revenue is aggrieved for deleting disallowance of deep discounting charges written off against rent income. 2. Rival contentions have been heard and record perused. 3. The facts of the case, in brief, are that the assessee is a company engaged in the business of letting out of commercial premises. In the course of scrutiny assessment, the AO noticed that the assessee has claimed deduction of Rs.1,03,00,000/- being discounting charges on debentures written off against rent received by the assessee. Since M/s. Litolier Properties Holdings Pvt.Ltd., discounting charges on debentures written off is not covered by provisions u/s 24 (b) of the Act, during the assessment proceedings, the assessee was asked by the AO why such claim should not be disallowed. The assessee has submitted its explanation but the AO did not accept the contentions of the assessee. The assessee company issued 4,00,000 Deep Discount Debentures to the Director against the loan amount of Rs.4 crores on face value of Rs.400/- per debenture (issue price - Rs.100 per debenture), redemption at par after 9 1/2 years. The assessee has not assigned any reason to adopt the value of Rs.400/- per debenture as against the face value of Rs.100/- of the debenture. The assessee has claimed proportionate discount including cumulative interest of Rs.1,03,00,000/- on account of Discounting charges on debentures written off, whereas the director, Mr. Ashok Mittal to whom the debentures have been issued has not crediting the same in his account. The AO also pointed out that no interest was payable by the assessee company during the year under consideration. In fact, the liability to pay interest shall arise only on the maturity of the Deep Discount Debenture. Hence, the claim of the assessee was not allowable u/s.24(b) of the I.T. Act.