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2020 (10) TMI 1159 - HC - Income TaxDiscount on issue of debenture - deduction allowed in proportion to which discount has been written off in the books of accounts over a period of five years - Whether discount was required to be spreadover in proportion to the percentage of redeeming of such debenture and to be allowed only to the extent of discount charged off in the relevant year? - as appellant following the mercantile system of accounting has incurred the expenditure of discount on issuance of debenture, was it not liable to be allowed in the same year in full as revenue expenditure - HELD THAT:- Assessee has not incurred an expenditure of ₹ 5 Crores but has merely issued debentures at a discount. The redemption of debenture takes place in stages over a period of time and discount on debenture results in enduring benefit during the period of debentures - expenditure incurred in creating an enduring benefit does not create any asset or add value to existing asset. There was no creation of capital asset, which would result in an advantage of enduring benefit by discount on debentures. Therefore, the assessee is entitled to deduction from the income for the current year only which is liable to be redeemed in the first year as against the entire discounts. The benefit of discount to the assessee is instant as assessee paid lesser amount as against the amount which was actually payable and therefore, the aforesaid benefit has to be offered to tax in the same year. The tribunal therefore, has rightly placed reliance on MADRAS INDUSTRIAL INVESTMENT COPORATION LTD. [1997 (4) TMI 5 - SUPREME COURT] Substantial questions of law are answered against the assessee.
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