TMI Blog2014 (12) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... a guest house - the intention was to excluded from deduction the expenses towards rents, repairs and also maintenance of premises / accommodation used for the purpose of a guest house of the nature indicated in subsection (4) of section 37 – Decided in favour of revenue. Expenses incurred on issue of debentures – revenue expenses or not – Held that:- Following the decision in INCOME TAX OFFICER Versus VXL INDIA LIMITED [2009 (7) TMI 1205 - GUJARAT HIGH COURT] - when the debentures are converted into equity shares, the assessing company has already got enduring benefit and the expenditure incurred by the conversion of equity shares has to be treated as capital expenditure -portion of the convertible debenture was converted into equity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), both the assessee as well as Revenue filed appeals before the Appellate Tribunal. After hearing both the sides, the Appellate Tribunal partly allowed both the appeals, vide impugned judgment and order dated 25.02.2002. It is against this order of the Appellant Tribunal that the present appeal has been preferred. 4. This appeal was admitted on 25.02.2003 on the following substantial questions of law; (i) Whether in the facts and circumstances of the case, the Tribunal has committed an error and whether the Tribunal was right in allowing the deduction of ₹ 8,55,716/- in respect of the rent, repairs and depreciation and other expenses in respect of the guest house u/s.37(4) of the Income Tax Act? (ii) Whether in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te distinction with regard to buildings used as guest houses as defined in section 37(5) and the provisions of sections 31 and 32 would have been sufficient for that purpose. In view of the principle rendered in the above decision, we answer question no.1 in favour of the Revenue and against the assessee. 5.1 Learned counsel for the Revenue was not in a position to controvert the proposition of law laid down in the above referred-case. 6. Insofar as question no.2 is concerned, the same is also concluded by a decision of this Court passed in Tax Appeal No.481/1999 482/1999 decided on 02.07.2009. The observation s made in Paras 7 to 9 of the said decision are relevant and it reads as under; 7. We heard learned Senior Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residue of any assets remaining for distribution after satisfying the claims of any other shareholders whose right to participate therein is limited. Equity share-holders are owners of the company, sharing its risks, profits, and losses and having a residual claim on the earnings and assets of a company and are paid their share of the company's profit after all other claims are met, and in the event of liquidation of the company, they share whatever is left of the company after all its creditors have been paid. They enjoy limited liability i.e. liability only to the extent of their share-holding and they are only entitled to vote at the company's meetings, thus controlling the management. If the company prospers, it is the equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the expenditure which formed part of the capital. As such disallowance made by the Income Tax Officer, which was confirmed by the Commissioner (Appeals) has to be sustained. The question of law raised by the Revenue, though not happily framed, is accordingly answered in the negative in favour of the Revenue and against the Assessee. Consequently, appeals are allowed and the order of the Tribunal is set aside. 6.1 At this stage, it is reported by learned Senior Counsel Mr. Soparkar that the aforesaid decision of this Court has not been carried in appeal before the Apex Court yet. Considering the facts of the case, we concur with the view taken by the coordinate Bench of this Court in the above-referred decision and accordingly, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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