ACIT, CIRCLE-7(1), DELHI, DELHI vs. DEWAN SUGARS LIMITED, UTTAR PRADESH
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Manish Agarwal
Per Satbeer Singh Godara, Judicial Member:
This Revenue’s appeal for Assessment Year 2023-24, arises against the Addl./JCIT(A)-6,
Chennai’s
DIN
&
order
No.
ITBA/APL/S/250/2024-25/1074089550(1) dated 06.03.2025, in proceedings u/s 143(1) of the Income Tax Act, 1961. 2. Heard both the parties at length. Case file perused.
This Revenue’s appeal raises the following substantive grounds: “1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in allowing the appeals of the assessee by deleting the addition made by the CPC amounting to Rs.68,83,13,581/- on account of disallowance u/s 43B of the Act in any proceeding previous year but allowable during the previous year?” Dewan Sugars Ltd.
2
4. We next note with the able assistance coming from both the parties that the learned CIT(A) has reversed the Assessing
Officer’s action invoking section 43B disallowance in the assessee’s case amounting to Rs.76,51,32,853/- in section 143(1) processing dated 03.05.2024; reading as under:
“4. Decision:
1 The appeal has been filed against the order of the DCIT, CPC u/s 143(1) dated 03/05/2024. On 30-10-2023, the appellant filed return declaring income of Rs.28,73,74,310/-. The said return was further revised on 31-12-2023 declaring income of Rs.28,33,08,030/-. The AO, in his intimation u/s 143(1) added a sum of Rs. 76,51,32,853/- as proposed adjustment to total income creating a demand against the assessee amounting to Rs.12,74,07,270/-. Aggrieved, the present appeal has been filed, raising two grounds.
2 On the issue of Disallowance of Rs.76,51,32,853/- on account of “Any amount disallowed under section 43B in any preceding previous year but allowable during the previous year.”, the appellant avers that the total amount of Rs.76,51,32,853/- claimed in the income tax return as “Any amount disallowed under section 43B in any preceding year but allowable during the previous year” has been claimed in 2 limbs. The details are hereunder:
Nature of Liability
Outstanding
Opening Balance not allowed in earlier previous years
Amount paid/set off during the year
Amount
Written back to the Profit and Loss
Account
COLUMN 1
COLUMN 2
COLUMN 3
Bonus
196735
96967
Leave Encashment
Payable
253640
244709
Interest to Fl/Banks:
PICUP
434634569
38357666
396276903
ALLAHABAD BANK
45366962
38119930
7247032
STRESSED
ASSETS
STABILISATION
FUND
TOTAL
The amount cl
Rs.76,51,32,853/
above.
In respect of the the appellant th appellant aver
Rs.7,68,19,272/- the Tax Auditors at Point No. 26. is filed in respon
3 The averm audit report, 7,68,19,272/- w relevant extract
IT 3
284789646
2
765241552
76819272
6
laimed by the assessee compa
/- is the aggregate of Columns 2
e amount of Rs. 7,68,19,272/- clai hat it was paid during the FY 2
s that The fact of payme
- has been verified and duly certi s of the company in their Tax Audit
Relevant extract of the Tax Audit se to the notices u/s 250. ments have been considered. In the auditor has certified th was paid during the FY 2022-2
of the report is given below:
TA No. 3613/Del/2025
Dewan Sugars Ltd.
284789646
688313581
ny i.e.
2 and 3
imed by 022-23, ent of ified by t Report t Report the tax at Rs.
23. The Dewan Sugars Ltd.
4
From the above, it is seen that the amount of Rs.7,68,19,272/- was paid during the FY 2022-23. Hence the addition of Rs.7,68,19,272/- is deleted. Appellant has further submitted that the appellant company had outstanding loans from Indian Bank (Formerly Allahabad
Bank), PICUP Ltd. and SASF. That, further, during the year under consideration, the appellant company entered into One Time Settlement (hereinafter referred to as “OTS”). As per the terms of the OTS the appellant company made the following payments to the 3 financial institutions as detailed hereunder:
Calculation of Opening Principal & Interest Amount Written
Off during the Year F.Y. 2022-2023
Indian
Bank
(Formerly
Allahabad Bank)
SASF
PICUP
Balance O/s as on 31.03.2023
76,957,102
284,789,646
499,634,569
Less: Allahabad Bank Refund A/c Dr.
Balance
9,672,202
0
0
67,284,900
284,789,646
499,634,569
Less: Bank Guarantee Margin - FDR
203,000
0
0
67,081,900
284,789,646
499,634,569
Break up of Opening Balance
Principal
21,714,938
0
65,000,000
Interest
45,366,962
284,789,646
434,634,569
Total of Opening Balance
67,081,900
284,789,646
499,634,569
Add: Interest during the year
2,986,132
0
23,137,077
Total to Pay
70,068,032
284,789,646
522,771,646
Payments
Paid during the year current Interest
2,986,132
0
23,137,077
Paid during the year old Interest
38,119,930
0
38,357,666
Paid during the year Principal
21,714,938
0
65,000,000
Paid during the year
62,821,000
0
126,494,743
Amount to be Written Off (in Old Intt.)
7,247,032
284,789,646
396,276,903
On the basis of the OTS entered into by the appellant company with the 3 financial institutions, an aggregate amount of Rs.68,83,13,581/- (7247032 + 284789646 +
396276903) was written off and credited by the appellant company in its books under the head “Other Income” and the said amount was credited to the Profit & Loss compiled for the year under consideration.
The appellant co
“Statement of P
March
2023”
Rs.722,945,729/
along with the clearly reveals been credited t written off on OT
P & L account hereunder:
IT 5
mpany has submitted the certified
Profit and Loss for the year ende disclosing
‘Other
Income
/- which forms part of this submis schedule of ‘Other Income’ whic that an amount of Rs.688313581
o other income on account of “
TS of Term Loans”. The certified co t and relevant schedule is repr
TA No. 3613/Del/2025
Dewan Sugars Ltd.
copy of ed 31st e’
at ssion as ch very
1/- has “Amount opies of roduced
The appellant in case law:
1. CIT vs. SA
HIGH COURT) TC
IS SUBMITTED).
2. DCIT vs. K
599/MUM/2019 (
In the case of Members of the I
“We have delibe find that the co hinges around th for deduction of the claim of the aggregating to R it in the years to A.Y 2008-09, the said respective y as per the mand observe, that as assessee had aft during the year amount of Rs.3
subsequent year
OTS would result
Our aforesaid v
Hon”ble High Co
Samudra Shoe O
06.06.2016. It w
IT 6
n its submission relies upon the fo
AMUDRA SHOE OVERSEAS LTD. (M
CA NO. 349 OF 2016 (COPY OF JUDG
K.S.DIESELS LTD (ITAT, MUMBAI) I
(COPY OF JUDGEMENT IS SUBMITTED
DCIT vs. K.S. Diesels Ltd., the ITAT, Mumbai have held as under:
rated at length on the issue in ha ontroversy involved in the presen he maintainability of the assessee"
interest of Rs. 3,23,84,509/- (supr e assessee that as the aforesaid
Rs.3,23,84,509/- was not actually o which they pertained i.e A.Y 200
erefore, while computing its income years it had suo motto disallowed th ate of Sec. 43B of the Act. We may held by the CIT(A), and rightly so, ter OTS paid interest of Rs. 1,91,1
r under consideration and not the 3.23,84,509/-, interest/part thereo in which the same had been waive t to a double taxation of the said a view is fortified by the judgment urt of Madras in the case of CIT
Overseas Ltd, TCA No. 349 of 2016
was observed by the Hon"ble High
TA No. 3613/Del/2025
Dewan Sugars Ltd.
ollowing
MADRAS
GEMENT
ITA NO.
D).
Hon’ble and and nt case
"s claim a). It is interest paid by 02-03 to e for the he same y herein
, as the 9,083/- e entire of in a d under amount.
of the VS. M/s
6, dated h Court
Dewan Sugars Ltd.
7
that the interest payable by the assessee to the financial institution which was earlier disallowed u/s 43B of the Act was eligible as a deduction on the waiver of such interest by the bank in One Time Settlement (OTS).
10. Backed by the facts involved in the case before us, we are of the considered view that as the assessee as per the terms and conditions of the OTS had during the year under consideration made a payment of interest of Rs.1,91,19,083/- to GIIC out of the interest of Rs.3.23,84,509/- (supra) that was disallowed u/s 43B in the said earlier years, therefore, such sum so actually paid would be eligible as a deduction during the year under consideration u/s 43B of the Act. As regards the balance amount of interest of Rs.1,32,65.426/- (Rs.3,23,84,509/-
(-) Rs.1,91,19,083/-], we concur with the view taken by the CIT(A) that if the said amount was disallowed u/s 43B in the earlier years and had been credited by the assesee company in its Profit and loss account for the year under consideration on account of waiver of interest income payable to GIIC, then, the claim of the assessee for deduction of such amount in its computation of income is in order. We, thus, in terms of our aforesaid observations find no infirmity in the view taken by the CIT(A) who had directed the A.O to carry out certain verifications, viz, (i).
that the interest waived was credited in the profit & loss a/c of the assessee company for the year under consideration; and (ii). that the interest waived had been included in the figure of „Profit" as per the profit & loss a/c taken to the computation of income; and (iii).that such interest payable to GIIC was disallowed u/s 43B in the earlier years.
Accordingly, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(A) we uphold his order in terms of our aforesaid observations.”
Accordingly, the AO is directed to carry out the following verifications:
(i) that the interest waived was credited in the profit &
loss a/c of the assessee company for the year under consideration;
(ii) that the interest waived had been included in the figure of “Profit” as per the profit & loss a/c taken to the computation of income; and (iii) that such interest payable to the Banks was disallowed u/s 43B in the earlier years.
Dewan Sugars Ltd.
8
Considering the case law referred by the appellant and submission made by it, this ground is allowed. The second ground being general in nature is not being adjudicated.
5. In the result, the appeal is allowed.”
1 We make it clear that the Revenue’s sole endeavour in the instant appeal is to revive the above latter component amounting to Rs.68,83,13,581/- arising from the assessee’s onetime settlement of term loans with various banks and financial institutions declared as “Account written off as OTS of term loans”.
That being the case, learned CIT-DR vehemently argues that the CPC’s impugned processing had rightly invoked section 43B of the Act to conclude that the impugned sum could not be allowed as a business deduction on actual payment. She could hardly dispute that the instant sole issue already stands decided in the assessee’s favour and against the department in various judicial precedents (supra) that such a onetime settlement amount written off indeed qualifies as a business deduction in the relevant financial year. This is indeed coupled with the fact that the learned CIT(A) has still directed the Assessing Officer to verify all the relevant facts whilst finalizing his consequential computation. We thus find no merit in the Revenue’s instant sole substantive ground which stands rejected therefore. Dewan Sugars Ltd.
9
6. No other ground or argument has been pressed before us.
This Revenue’s appeal is dismissed. Order Pronounced in the Open Court on 04/12/2025. (Manish Agarwal) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 04/12/2025 *Subodh Kumar, Sr. PS*