TMI Blog2009 (7) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... capital. As such disallowance made by the Income Tax Officer, which was confirmed by the Commissioner (Appeals) has to be sustained. The question of law raised by the Revenue, though not happily framed, is accordingly answered in the negative in favour of the Revenue and against the Assessee. Consequently, appeals are allowed and the order of the Tribunal is set aside. - TAX APPEAL No. 481 of 1999 With TAX APPEAL No. 482 of 1999 - - - Dated:- 2-7-2009 - MR. K.S.RADHAKRISHNAN AND MR. AKIL KURESHI, JJ. MR. MANISH R. BHATT, SENIOR COUNSEL WITH MRS MAUNA M BHATT FOR THE APPELLANT MR. SAURABH SOPARKAR, SENIOR COUNSEL FOR THE RESPONDENT CAV JUDGMENT (Per : HONOURABLE THE CHIEF JUSTICE MR. K.S.RADHAKRISHNAN) Followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture of ₹ 16,156/for conversion of debentures into shares and had claimed the said amount as revenue expenditure. The Assessing Authority noticed that the assessee for the assessment year 198485 had incurred a total expenditure of ₹ 19,16,923/for issuing debentures. It was also noted that out of which ₹ 16,000/was paid to Amarchand and Mangaldas and Hiralal Shroff Co., Bombay which had not been debentures. The Assessing Authority disallowed ₹ 6,90,093/-out of legal expenditure of ₹ 19,16,925/incurred for issuing debentures. For the assessment year 198586, the assessee claimed that it had incurred an expenditure of ₹ 16,156/for conversion of debentures into shares and claiming the same as revenue expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebentures was converted into equity shares and company had got enduring benefits. Commissioner (Appeals) placed reliance on the decision of the Apex Court in India Cements Vs. Commissioner of Income Tax, Madras [ 1966] 60 ITR 52, took the view that expenditure incurred by the assessee company on convertible debentures has to be treated as capital expenditure. Holding so, appeal preferred by the assessee was dismissed. 4. Assessee took up the matter in appeal before the Tribunal. Tribunal, however, allowed the appeals for both the assessment years, stating that the assessee had treated the expenditure incurred for convertible debentures as loan in the balance sheet and their part conversion into equity shares would be in the nature of rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of loan raised by way of issue of convertible debentures and till conversion into equity shares, they were in the nature of loan and interest was also payable thereon. Learned counsel also placed reliance on the decision of India Cements Vs. Commissioner of Income Tax, Madras [ 1966] 60 ITR 52. Reference was also made to the decision of the Apex Court in Deputy Commissioner of Income Tax Vs. Core Health Care Limited [2008] 298 ITR 194, decision of the Punjab and Haryana High Court in Commission of Income Tax Vs. S.A. Builders Pvt.Ltd. [ 2008] 299 ITR 88, decision of Calcutta High Court in Commissioner of Income Tax Vs. East India Hotels Ltd [2001] 252 ITR 860 and decision of Madras High Court in Commissioner of Income Tax Vs. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital. Equity share capital is that part of share capital which confers a right either to the whole or part of any residue of any profits or to the whole or part of any residue of any assets remaining for distribution after satisfying the claims of any other shareholders whose right to participate therein is limited. Equity shareholders are owners of the company, sharing its risks, profits, and losses and having a residual claim on the earnings and assets of a company and are paid their share of the company's profit after all other claims are met, and in the event of liquidation of the company, they share whatever is left of the company after all its creditors have been paid. They enjoy limited liability i.e. liability only to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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