| COURT: | ITAT Ahmedabad |
| CORAM: | Anil Chaturvedi (AM), Shailendra Yadav (JM) |
| SECTION(S): | 43B |
| GENRE: | Domestic Tax |
| CATCH WORDS: | actual payment |
| COUNSEL: | J. P. Shah |
| DATE: | June 25, 2015 (Date of pronouncement) |
| DATE: | June 30, 2015 (Date of publication) |
| AY: | 2005-06 to 2007-08 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 43B(e): Conversion of outstanding interest into a loan does not constitute "actual payment" of the interest so as to qualify for deduction | |
On perusing Section 43B(e), it is seen that interest on any loan or advance from a schedule bank, in accordance with terms and conditions of the agreement governing such loans or advance, would be allowed as deduction in the previous year in which sum is actually paid by the Assessee. We further find that Explanation 3D has been inserted by Finance Act, 2006 with retrospective effect from 01.04.1997 and the Explanation 3D states that for the removal of doubt it is declared that the deduction, being interest payable, shall be allowed if such interest has been actually paid and any interest referred to in clause (e) which has been converted into a loan or advance shall not be deemed to have been actually paid. In the present case, it is an undisputed fact that a portion of interest has been converted into loan pursuant to the CDR package approved by the Bankers of the Assessee. Considering the express provision of the Act read along with Explanation 3D and in view of the aforesaid facts, we are of the view that the A.O was right in disallowing the claim of Assessee. Before us, ld. A.R. has also relied on the decision of Karnataka High Court in the case of Vinir Engineering Pvt. Ltd. vs. DCIT reported in 313 ITR 154. We are of the view that the ratio of the aforesaid decision would not be applicable to the facts of the present case more so when in that case, the interest was payable to a Finance Corporation and not to a Scheduled Bank and the issue of disallowance was also not with respect to Section 43B(e) of the Act.
SORRY, the finance act 2006 making 1997 positions till this finance Act 2006 modified as ‘retrospective amendment’ is indeed insensible, and beyond any norms of common sense, retrospective amendments are basically not a sensible idea though permitted but retrospective provisions would upset the boat of natural justice, one should note that is called the taxation jurisprudence read with constitutional jurisprudence together…you cannot make anything just because you as finance minister one of few men thinking could never become a great sense.
i would like to cite the U K SUPREME COURT JUDGEMENT IN AN immigration matter in 2015 in a E U matter the supreme court really overturned the secy of state matter that the Afgan refugee was to be deported by secy of state, though the lower immigration tribunal, even upper tribunal overturned the lower tribunal order though lower tribunal went as per the statute but the upper tribunal did not agree with the lower tribunal but supreme court really overturned the secy of state order in view of the changed circumstances in regard to the Afgan refugee, that would give what is to be a prudent governance is.
that way prudence is not to make too many retrospective amendments but progressive amendments only.
so this judgement could be questionable before high court or even supreme court of india under judicial review.
i am very sad, what kind of judgements that are delivered.