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2019 (4) TMI 1321 - HC - Income TaxAddition made on account of front end fees - capital or revenue or deferred revenue expenditure - front end fee is part of interest u/s 2(28A) - assessee claimed amortization of the expense u/s 35D - HELD THAT:- The facts of this case are very similar to those before the Supreme Court in MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1997 (4) TMI 5 - SUPREME COURT] Here the assessee was required to pay front end fee to obtain loan from a bank or financial institution. It also had to pay interest. As I have observed above, the front end fee is part of interest under Section 2(28A) of the said Act. Now this interest payment was spread over the duration of the loan. Therefore, the front ends fee constituted interest liability of the assessee spread over a period of time. Obtaining the loan and paying interest to service it ensured long term benefit to the assessee. Hence, this expenditure was revenue and not capital. Furthermore, according to the above decision, the assessee was entitled to amortize it. Tribunal is required to re-determine this issue by considering Madras Industrial Investment and determine the allowable revenue, expenses of the assessee for the relevant assessment year. The impugned order of the tribunal is set aside with regard to the issue concerning front end fee. - Decided in favour of the assessee. Addition of unrealized foreign exchange gain - HELD THAT:- Assessee conceded that the decision of in the case of Commissioner of Income Tax Vs. Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] was in favour of the revenue. Thus question is answered in favour of the revenue as the issue is covered against the assessee by the above judgment of the Supreme Court. That part of the impugned order dealing with unrealized foreign exchange gain is set aside.
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