TMI Blog2009 (7) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the expenditure incurred on the issue of debentures is an allowable expenditure under section 37 of the Income-tax Act, 1961 when 20 per cent. of the funds raised through debentures were to be com-pulsorily converted into equity share capital after one year from the date of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Cements Ltd. v. CIT [1966] 60 ITR 52, holding that it was irrelevant to consider the object for which loan was obtained by issuing debentures. 3. We have heard learned counsel for the parties. 4. Learned counsel for the assessee submits that the Rajasthan High Court in CIT v. Secure Meters Ltd. [2009] 221 CTR 405 ; [2010] 321 ITR 611 following the judgment of the Calcutta High Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. Learned counsel for the Revenue has not been able to show any reason why the said expenditure could not be allowed merely because ultimately the debentures may be converted to shares and become part of share capital. 6. Accordingly, the question referred is answered against the Revenue and in favour of the assessee. 7. The reference is disposed of accordingly. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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