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2009 (7) TMI 714 - HC - Income TaxCapital or Revenue- The assessee, a public limited company, issued secured convertible debenture and had taken permission from the Controller of capital issue to convert a part of the debentures into equity capital. The Assessing Officer disallowed the claim of the assessee with respect to the expenditure incurred in the process of issuing the debentures as capital expenditure on the ground that the debentures would be later converted into shares. The Commissioner (Appeals) and Tribunal upheld the assessee claim. Held that- the expenditure with respect to issue of debentures was incurred in the process of carrying on of business since raising of funds itself was necessary for running of business. The department had failed to show as to why the expenditure could not be allowed merely because the debenture may be converted to share and become part of share capital.
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