Case Law Details
Strides Arcolab Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that FCCB i.e. Foreign Currency Convertible Bond expenses included as part of FCCB premium expenses is allowable.
Facts- The assessee is engaged in the business of manufacturing pharmaceutical formulations. For the assessment year 2010-11, the assessee filed the return of income declaring a loss of Rs.203,83,86,890/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. Since the assessee had international transactions with its Associated Enterprises (AEs), a reference was made to the Transfer Pricing Officer for determination of arm‟s length price (ALP) of the international transactions.
AO passed a draft assessment order incorporating transfer pricing adjustments. The Ld. DRP gave partial relief to the assessee.
Conclusion- The deduction claimed by the assessee for the year under consideration is a continuation of 1/5th of FCCB premium as claimed in AY 2008-09 and therefore the issue is covered by the above decision of the coordinate bench. It is also relevant here to note that the DRP in assessee‟s case for AY 2013-14 has directed the AO to allow the premium on redemption of FCCB of USD 100 Mn as a deduction provided the assessee withdraws the claim in 2009-10 to 2013-14. We accordingly direct the AO allow the deduction claimed by the assessee towards FCCB premium u/s. 37(1) of the Act taking into consideration the directions of the DRP for AY 2013-14.
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