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Income Tax Appellate Tribunal, “D”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY, JM
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.
By the impugned order, CIT(A) allowed assessee’s claim after observing as under:- 4.2. I have carefully considered the facts and circumstances of the case and submissions made by the learned AR. From the details filed it is evident that the discounting charges on deep discount debentures were treated on par with interest and were allowed under section 24 (b) of the Act by CIT(A), ITAT and the jurisdictional High Court in appellant's own case for earlier years. The learned AR has also submitted the copies of the M/s. Litolier Properties Holdings Pvt.Ltd., decisions of the above authorities. As per these decisions discounting charges on deep discounting debentures are allowed to be claimed under section 24(b) of the Act. Respectfully following the above decisions the ground is allowed for the present assessment year also.