– August 12, 2021 3:16 p.m.
The Apex court found that the new conditions, which are of a clarifying nature to the existing tax law, cannot be accepted as retroactive.
The Assesse, MM Aqua Technologies Ltd., requested a deduction of Rs.126.96.36.1994 / – under Section 43B due to the issuance of Notes in lieu of accrued interest payable to financial institutions. By order of October 29, 1998, the expert rejected the complainant’s allegations, stating that the issue of bonds did not correspond to the original conditions on which the loans were granted and that interest was to be paid on the grounds that a Subsequent amendment to the terms of the Agreement, as then amended, would be contrary to Section 43B (d) and render that amount non-deductible.
The Commissioner of Income Tax (Appeals) upheld the appeal, which was upheld by the Income Tax Appellate Tribunal. Revenue appealed to the High Court, asking, “Is the term loan financing the interest amount an actual payment within the meaning of Section 43B of the Income Tax Act 1961?”
The High Court ruled that Statement 3C was applicable to the present case with retroactive effect from 04/01/1989 as it relates to AY1996-97. Note 3C accurately covers the issue raised in this complaint as it refutes the Assesse’s assertion that the inclusion of this note, interest converted into loans, is deemed to be “actually paid”. The appraiser cannot claim a deduction under Section 43B of the Act. “
The Chamber of Judges RFNariman and Judge BRGavai, in overturning the High Court judgments, found that the 3C Justification was directly tightened as the outstanding interest had not actually been paid, but instead a new borrowing of the loan occurred that the case was in the express language of the statement 3C. This is a far cry from the facts of the present case, which were not addressed at all in this judgment. Consequently, this judgment is also distinguishable and would not be applicable to the facts of the present case.
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