Baring Private Equity Partners (India) Pvt. Ltd., New Delhi ACIT, Circle- 4(1), New Delhi

This case involves Baring Private Equity Partners (India) Pvt. Ltd. and their appeal against an income tax order for the assessment year 2013-14. The core issue revolves around how interest income from Non-Convertible Debentures (NCDs) subscribed to in Muthoot Finance Ltd. should be treated. Although the assessee opted to receive the interest upon maturity of the NCDs, they had recognised this interest income in their Profit & Loss account for the current year. The Assessing Officer added this amount back to the assessee's income, leading to the present appeal.

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘A’ NEW DELHI

BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER
&
SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER

ITA No.- 6713 /Del/2017
(Assessment Year: 2013-14)

Barring private equity
partners (India) private
limited, A-16/9,
Vasant Vihar,
New Delhi 110057
PAN No. AACCB 5013B
Appellant 

 Vs. 

ACIT,
circle 4 (1),
Central Revenue building
New Delhi-110002
Respondent

Assessee by Sh. MP Rastogi, advocate
Sh. Previn Chand, CA
Revenue by Sh. Mahesh Thakur, Sr. DR

Date of hearing: 9/6/2021
Pronouncement on 9/6/2021

ORDER

PER K. NARASIMHA CHARY, JM

 Aggrieved by the order dated 29/9/2017 passed by the learned Commissioner of Income Tax (Appeals)-44, New Delhi (“the Ld. CIT(A)”) in appeal No. 88/2016-17/CIT (A)-44, for the assessment year 2013-14, in the case of M/s Barring Pvt. Ltd partners (India) Private Limited, assessee preferred this appeal. 

2. Brief facts are that during the Assessment Year 2012-2013, the assessee had subscribed to 7500 NCDs of Rs. 1,000/- each issued by Muthoot Finance Ltd.; that these NCDs have an interest obligation on the part of Muthoot; that theassessee is entitled to interest on these NCDs; and that the assessee has opted/chosen to receive interest on the maturity/redemption of these Debentures. As per the the Allotment Advice, the assessee is entitled to receive interest on the expiry of 66 months from the date of allotment. Prospectus also makes it clear that the assessee has chosen to receive interest on the date of redemption of NCDs. It is, therefore,evident that on the expiry of 66 months, the assessee is entitled to receive Rs.2,000/- representing Rs. 1,000/- being the face value of NCD and Rs. 1,000/- being the interest for 66 months. The assessee, however, in order to comply with the Accounting Standard, had shown the Interest Income of Rs. 13,63,735/- in its Profit & LossAccount. Accordingly, the assessee excluded the interest of Rs. 13,63,735/- from the total Incomewhile filing the return of income on 29/11/2013 declaring an income of Rs. 5, 94,91, 580/-.

3. Learned Assessing Officer, by order dated 22/12/2016 held that inasmuch as the assessee admitted and had shown in the P&L Account that a sum of Rs. 13, 63, 735/-as income of current year under the head of income, which is not shown in the computation has to be added back to the income of the assessee.

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