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2021 (10) TMI 1156 - HC - Income TaxDeduction u/s 35D - foreign currency convertible bonds [FCCBs] as debentures and considered it to be part of ‘capital employed’ for allowing deduction - whether FCCB convertible bonds are debentures or no? - HELD THAT:- As in terms of the Companies Act, 1956 debenture includes debenture shares and the bonds being interest bearing instruments which represent a loan, FCCB bonds, the instruments issued to investors for raising funds which is repayable after certain period is nothing but a debt instrument. This view is supported by the judgment of the High Court of Madras in case of PVP Ventures Ltd. [2012 (7) TMI 696 - MADRAS HIGH COURT] confirmed by the Hon’ble Apex Court 2014 (3) TMI 1127 - SC ORDER] by the Revenue. For the reasons aforesaid, the finding of the Tribunal that the increase or decrease in liability on account of fluctuation in foreign exchange as on the date of the balance sheet would increase or decrease the liability of the assessee and such liability would be on capital account as such, the gain or loss would be on capital account and not taxable cannot be faulted with. Hence, the challenge made by the Revenue on this issue is answered against the Revenue and in favour of the assessee.
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