Britannia Industries Ltd. Vs DCIT (ITAT Kolkata)
Double Disallowance Deleted Because Amount Was Already Added Back in Income Tax Return; Broken-Period Interest Not Taxable Because Debentures Were Sold Before Interest Became Due; ITAT Grants Relief on Broken-Period Interest Because Same Income Was Taxed Through Capital Gains; DTAA Claim on Dividend Distribution Sent Back for Verification Because Key Shareholder Documents Were Missing.
In this batch of appeals, the Income Tax Appellate Tribunal (ITAT), Kolkata, considered multiple issues arising for Assessment Years (AYs) 2016-17, 2020-21, and 2021-22.
For AY 2020-21, the primary issue concerned a write-off of ₹16 crore representing diminution in the value of investment in a wholly owned subsidiary. The assessee had already added back this amount while filing its return of income. During assessment proceedings, it additionally claimed that the write-off should be allowed as a business loss. The Assessing Officer (AO) rejected the claim and again added the amount to the returned income, resulting in a double disallowance. The Commissioner (Appeals) accepted the assessee’s contention that the investment in the subsidiary was made for business purposes and constituted a business asset. Since the subsidiary became commercially unviable and the investment turned worthless, the write-off was held to be a business loss allowable under section 28. The Tribunal found that the AO had indeed made a double disallowance because the amount had already been added back in the return. It directed the AO to delete the duplicate addition and thereafter allow the deduction of ₹16 crore as permitted by the Commissioner (Appeals).
