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TMI Blog2016 (2) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and consortium fee paid to PNB without appreciating that the AO was right in considering the above expenses capital in nature. As the expenses were incurred and paid to bank for processing of various loans and CDR package hence the same were capital in nature. 2 The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 15,75,045/- on account of stamp duty charges paid for issue of debenture certificates while failing to distinguish in partly convertible debenture and fully convertible debentures. The AO was correct in considering the stamp duty charges for issue of debentures certificates as capital in nature." 3. Ground 1 relates to deletion of addition of Rs. 28,42,760/- being processing and consortium fee paid to PNB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-se can never be capital in nature and is a part of the routine job of the business. In this regard the decision of the Delhi High Court in CIT vs. Monnet Industries Ltd. [2008] 16 DTR (Del) 307 is relied upon. Further, the loan cannot be construed as a contingent liability in as much as the bank had raised the said amount on the assessee. Once the amount had been raised, the same had been acknowledge but had been disputed. Because of the dispute, the assessee preferred to keep the same in the suspense account. Once the account had been credited, it cannot be called a contingent liability. Decision of the Apex Court in Kedarnath Jute Mfg. Ltd. vs. CIT (1971) 82 ITR 363 (SC) is a guiding decision. As such, therefore, the addition of Rs. 28, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not prevail with regard to the quantum of liability etc. An assessee who follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed." 8. Respectfully following the above judicial pronouncements, we hold that the finding of the CIT(A) is in order and as such, the ground raised by the revenue is rejected. 9. Ground 2 pertains to deletion of addition of Rs. 15,75,045/- on account of stamp duty charges paid for issue of debenture certificates. We notice that the Assessing Officer had made disallowance by relying upon the judgment of the Apex Court in the case of Punjab State Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds in ground of appeal no. 2." 12. We find merit in the aforesaid finding that the debentures are loans raised by the assessee, therefore, any expenditure including stamp duty for such debentures is eligible for deduction for computing income of the appellant. A Coordinate Bench of Tribunal in the case of DCIT vs. UAG Builders (P) Ltd. 53 SOT 370 (Del) while considering the issue of fully convertible debentures has deleted the addition by observing as under :- "7. We have heard the rival contentions in light of the material produced and precedent relied upon. We find ourselves in agreement with the Ld. Commissioner of Income Tax (A)'s finding that there was no contingency involved in the accrual of liability with reference to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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