Case Law Details
Religare Finvest Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that Compulsory Convertible Debentures are in the nature of borrowed fund and continued to be debt till conversion thereof into shares and consequently interest on Compulsory Convertible Debentures is allowable as revenue deduction u/s 36(1)(iii) of the Income Tax Act.
Facts- The case of the assessee was selected for scrutiny. Order u/s 143(3) of the Act was passed assessing the income at Rs. 307,17,44,697/- after disallowance of Rs.16,72,58,935/- u/s 14A read with Rule 8D of the Income Tax Rules, 1962, Rs. 9,65,00,120/- on account of depreciation arising out of change in method of accounting of financial lease, addition of Rs. 21,67,50,189/- on accounts of bad debts write off , Rs. 13,75,19,178/- on account of disallowance of interest on Compulsory Convertible debentures (CCDs) and disallowing of Rs. 27,05,83,732/- from support services and reimbursement expenses claimed, aggregating to total disallowances of Rs. 88,86,12,175/-.
CIT(A) upheld the disallowance made by the A.O. to the extent of Rs. 6,40,98,834/- u/s 14A of the Act as against the suo-moto disallowance of 77,45,598/-, upheld the disallowance of Rs. 9,65,00,120/- claimed on vehicle given on finance lease and also upheld the ad-hoc disallowance to the extent of Rs. 19,95,37,610/- being 25% of support service fees and reimbursed of expenses, aggregating to Rs. 79,81,50,411/- paid by the Assessee to group Companies.
Being aggrieved, both revenue and assessee has preferred the present appeal.
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