TMI Blog1998 (12) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... g its prayer for requiring the Tribunal to refer only question No.1 for the opinion of this Court. 1. Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeals) deleting the addition of ₹ 1,21,429/- made on account of premium payable on redemption of debentures, when the Assessing Officer was of the opinion that the entire amount of premium accrued in the year in which the debentures were redeemed and did not form part of the expenditure for the current year? 2. Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeals) directing the Assessing Officer not to include the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are repaid or redeemed or the liability accrues earlier thereto. 4. The question arose for consideration before Their Lordships in Supreme Court in Madras Industrial Investment Corporation Limited v. Commissioner of Income-tax 225 ITR 802. It was a case where the appellant company had issued debentures in December 1966, at a discount. The total discount on the issue of ₹ 1.5 crores amounted to ₹ 3.00 lakhs. For the assessment year 1968-69, the company wrote off ₹ 12,500 out of the total discount of ₹ 3 lakhs being the proportionate amount of discount for the period of six months ending with June 30, 1967, taking into account the period of 12 years which was the period of redemption and dividing the amount of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it said: Issuing debentures at a discount is another such instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years. There is a continuing benefit to the business of the company over the entire period. The liability should, therefore, be spread over the period of the debentures. The appellant, therefore, had, in its return, correctly claimed a deduction only in respect of the proportionate part of discount of ₹ 12,500/- over the relevant accounting period in question. 7. The ratio fully governs the case at hand. It makes little difference whether the company has undertaken to pay larger sum than borrowed on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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