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3. The facts relating to the issue are stated in brief. The assessee company is engaged in the business of manufacture and sale of large diameter carbon steel line pipes required for high pressure transmission application for gas, crude oil, petrochemical products and portable water.

M an In d u s t r i e s ( In d i a ) L i m i te d The assessee had borrowed funds by issuing Foreign Currency Convertible Bonds (FCCB) during the financial year 2012-13. The same was issued at a premium and the total amount of premium paid Rs. 112.05 crores. The assessee was required to deduct TDS @ 10% from the above said payment. The assessee borne the TDS liability (also called as "withholding tax"). Accordingly the total premium paid by the assessee worked out to Rs. 124.45 crores, out of which the assessee claimed a sum of Rs.100.78 crores as revenue expenditure and capitalised the balance amount of Rs. 23.66 crores. The computation in this regard has been tabulated in the assessment order as under :-

        Particulars                             Amount (Rs.)
        Premium paid                              1,12,05,07,097
        10% WHT                                     12,40,33,655
        Total Premium claimed                     1,24,45,40,752
        Less : Revenue expenditure claimed        1,00,78,62,838
        Premium capitalized                         23,66,77,914

The Assessing Officer noticed that, as per the agreement entered for receiving FCCB, the assessee would be liable to bear withholding tax only in excess of 10%. Since the withholding tax was only 10%, the Assessing Officer took the view that there was no necessity for the assessee to bear withholding tax.

9. We heard the rival contentions and perused the record. The facts relevant to the issue are that the assessee has borne the TDS payable on the FCCB premium paid by the assessee. The withholding tax liability so borne by the assessee was Rs.12.40 crores. In the normal course, the TDS amount would be reduced from the amount payable to the payee and the net amount alone will be paid to him. The TDS amount will be remitted to the credit of the payee, who can adjust the same against his tax liability. In the instant case, since the assessee has borne the TDS deductible on the amount of premium payable on FCCD, the same would become additional cost to the assessee. Hence it will go to increase the premium payable on FCCB. The assessee has capitalized a portion of premium amount, which included the above said amount of Rs.12.40 crores. The amount was capitalized by the assessee in the year relevant to AY 2013-14 and it also claimed depreciation thereon, which was disallowed by the assessing officer in AY 2013-14. The Ld CIT(A), however, deleted the disallowance and hence the revenue filed appeal before the Tribunal in that year. As stated by Ld A.R, the ITAT has confirmed the order passed by Ld CIT(A), vide its order dated 25.11.2021 passed in ITA No.7530/Mum/2019, with the following observations:-

101. After hearing the parties and material placed before us, we note that the assesse has redeemed FCCB and paid total premium of 1,12,05,07,097/- by grossing up the amount by withholding tax. In other words the TDS deducted and deposited by the assesse on behalf bondholders was treated as part of that. Besides we note that claim was in accordance with section 195A of the Income Tax Act, 1961 as the Company paid withholding tax of Rs.12,40,33,655/- by the grossing up the amount of premium and paid Rs.112,05,07,097/- as premium on redemption of FCCB to bondholder. We also note that it has been provided in the section 195A itself which is extracted below: