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2017 (3) TMI 73 - ITAT KOLKATARectification of mistake - Upfront premium on Zero Coupon Non-Convertibility debenture - method of accounting followed - selection of assessment year - Held that:- No merit in this appeal by the revenue. Firstly the question whether the upfront premium on Zero coupon Non-convertible debentures to the extent of ₹ 72,53,359/- which was pertaining to the period from October, 2005 to March, 2006 can be regarded as revenue expenditure or not or was in the nature of interest or was advance payment of future interest liability which cannot be allowed under the mercantile system of accounting are matters which the AO ought to have considered while concluding the assessment u/s.143(3) of the Act. Recourse to the provisions of Sec.154 cannot and ought not to be made for such highly debatable issues which might require detailed examination of facts. Secondly the upfront premium paid was in the nature of interest on loan on borrowing, as admittedly the loans in questions were non-convertible debentures. Such expenditure was in the nature of interest expenses and had to be allowed as deduction. Further the AO has erroneously considered the sum of ₹ 72,53,359/- as not pertaining to the relevant previous year and was a payment of interest in advance. The sum claimed as deduction was in relation to the period from October, 2005 to March, 2006 and therefore rightly claimed as deduction in A.Y.2006- 07 by the assessee. Thus the order of CIT(A) which is in conformity with the legal position as explained above does not call for any interference. Accordingly the same is upheld and the appeal by the revenue is dismissed.
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