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2012 (4) TMI 127 - HC - Income TaxDebenture Redemption Reserve - whether qualify as reserve for the purpose of Section 115JA - AY 1997-98 – Held that:- Supreme Court in National Rayon Corporation Ltd. Vs. CIT (1997 (7) TMI 113 - SUPREME Court) have held that “basic principle is that an amount set apart to meet a known liability cannot be regarded as reserve”. Where a company issues debentures, the liability to repay arises the moment the money is borrowed. The mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve. Consequently, Tribunal was correct in holding that the Debenture Redemption Reserve is not a reserve within the meaning of Explanation (b) to Section 115JA – Decided in favor of assessee. Dis-allowance of pre-operative expenses by A.O. treating it to be capital expenditure – Held that:- Tribunal deleted the dis-allowance in view of its earlier decision in relation to AY 85-86 confirmed by this court treating Pre-operative expenses viz salary and wages, staff welfare expenses, power, travelling, legal and professional fees and miscellaneous expenses to be revenue expenditure – No infirmity found in the order – Decided in favor of assessee.
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