The Income Tax Appellate Tribunal (ITAT), Ahmedabad dismissed appeal as proper consideration of raising funds though FCCB into convertible bond of ordinary equity shares.
The assessee, M/s. ORG Informatics Limited is engaged in the business of trading of Computer System/ Telecom System/development of Software and GIS. The assessee filed return of income under Section 139(1) of the Income Tax Act, 1961 declaring total income of Rs.5,59,67,400. The return of income was processed under Section 143(1) of the Act. The case of the assessee was selected for scrutiny. The notice under Section 143(2) of the Act was issued which was duly served.
Subsequently, notice under Section 142(1) read with Section 129 of the Act was issued on 13.01.2010 calling thereby preliminary information, documents such as copy of audited balance sheet and tax audit report in form no.3CB & 3CD etc. The detailed questionnaire was issued on 13.07.2011 for which the ld. AR of the assessee as well as Sr. Manager (Accounts) appeared before the Assessing Officer.
The Assessing Officer made addition of Rs.29,65,012 being upward adjustment to total income of the assessee. The Assessing Officer also made addition of Rs.5,000 in respect of Sales Tax penalty of Rs.1,59,656/- in respect of interest on late payment of TDS and Rs.3,30,36,346 claimed as deduction on issue expenses of Foreign Currency Convertible Bonds (FCCB) claimed as deduction.
Aggrieved the assessee filed an appeal before the Tribunal.
A Division Bench consisting of Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “The assessee has given details as regards to computation of income for expenses on issue of FCCB, security premium on redemption of FCCB and interest booked under FCCB expenses and initial conversion price of Rs.130 per share from the issue date and until 14.10.2012 was defined by the assessee.”
“Therefore, mere reference on the decision by the CIT(A) cannot be called as not deciding the case on merit. The CIT(A) has taken proper cognisance related to various terms offered for raising funds though FCCB into convertible bond of ordinary equity shares and thus ratio of Secure Meters squarely applied in assessee’s case by the CIT(A). Thus, appeal of the Revenue is dismissed.”
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