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| The Tax Publishers2020 TaxPub(DT) 4999 (Bang-Trib) INCOME TAX ACT, 1961
Section 92C
Till the date of conversion, for allowability of interest, CCDs issued to overseas entity were to be considered as debt only and interest thereon was to be allowed and could not be disallowed by saying that CCDs were FDI and not debt.
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Transfer pricing - Determination of ALP - Payment of interest on compulsorily convertible debentures (CCDs) - TPO treated CCDs as FDI
Assessee claimed deduction of payment made to its AE on account of interest on compulsorily convertible debentures (CCDs). TPO held that fully and mandatorily convertible instruments were to be considered as FDI and amount of interest on CCD's was not to be treated as an expenditure at all the same was neither a revenue expenditure nor it was capital expenditure. Held: Till the date of conversion, for allowability of interest, CCDs were to be considered as debt only and interest thereon was to be allowed and could not be disallowed by saying that CCDs were FDI and not debt.
Followed:IT(TP)A No. 2060/Bang/2016 and others in the case of CAE Flight Training (India) (P) Ltd., vide Order, dated 25-7-2019 : 2019 TaxPub(DT) 5358 (Bang-Trib) and 2010 TaxPub(DT) 2322 (Mum-Trib).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2009-10 & 2010-11
IN THE ITAT, BANGALORE 'A' BENCH
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