Prasandi Infotech Park P. Ltd. vs. ACIT, Central Circle 1

Parties Involved

Facts Summary

The assessee, Prasandi Infotech Park P. Ltd., filed its return of income for the Assessment Year 2017-18 declaring a loss of Rs.57,13,75,718/-. The case was selected for scrutiny, and notices under section 143(2) and 142(1) of the Income-tax Act, 1961, were issued. The assessee claimed a disallowance of prior period expenses amounting to Rs.33,65,13,449/-, which was the interest payable on a loan taken from SERI Infrastructure Finance Limited in earlier years. The Assessing Officer disallowed this claim, stating that the expenditure should have been claimed in the relevant assessment years. The assessee appealed this decision before the Commissioner of Income-tax (Appeals)-23, New Delhi, which was also dismissed. The assessee then appealed to the Income Tax Appellate Tribunal, raising several grounds of appeal regarding the disallowance of the interest expenditure.…

Legal Issues

• 1. Whether the disallowance of a sum of Rs. 33,65,13,449 made by the Assessing Officer towards interest payable is valid.
• 2. Whether the expenditure of Rs. 33,65,13,449 crystalized during FY 2014-15 and FY 2015-16.
• 3. Whether the negotiation for waiver of interest with the lender gives rise to an event on which the payment of interest is contingent.
• 4. Whether the nature of expenditure Rs. 33,65,13,449 remained prior period expenditure.
• 5. Whether the correspondence between the appellant and the lender was for reduction of interest.
• 6. Whether the disallowance made by the assessing officer is sustainable despite the lender having considered the income in their return of income and paid taxes.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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