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DCIT, Circle -1 (1) , New Delhi Versus M/s. Alcobex Metals Ltd

2016 (2) TMI 424 - ITAT DELHI

Addition being processing and consortium fee paid to PNB - CIT(A) has deleted the disallowance - Held that:- There is no basis for the revenue to contend that any expenditure incurred towards loan is not an eligible business expenditure. Such an expenditure is revenue expenditure as has also been held by the Apex Court in the case of India Cements Ltd. vs. CIT (1965 (12) TMI 22 - SUPREME Court ) - Decided against revenue

Addition on account of stamp duty charges paid for issue of debe .....

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ccrual of liability with reference to the interest on the debentures. Also rightly observed that debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure - Decided against revenue - ITA No.5344/Del./2010 - Dated:- 12-1-2016 - SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Shri Gautam Jain, Advocate For The Revenue .....

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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 ₹ 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 .....

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e payment in these charges and credited the sum to the suspense account and therefore, it is not liability during the instant year. The CIT(A) however has held that such an expenditure incurred is a revenue expenditure. As such, the revenue is in appeal. 4. The learned DR contended that the expenses incurred for processing of loans and CDR packages are capital expenditure, more particularly when these have been disputed by the appellant company and therefore, are not eligible for deduction in th .....

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capital or as a contingent liability. The said expenditure was paid to the bank for taking of loan and CDR package. It is well settled that processing of loan per-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 asses .....

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onsideration of the above findings, we notice that there is no basis for the revenue to contend that any expenditure incurred towards loan is not an eligible business expenditure. Such an expenditure is revenue expenditure as has also been held by the Apex Court in the case of India Cements Ltd. vs. CIT (supra) whereby Their lordships have concluded as under: We are of the opinion that: (a) the loan obtained is not an asset or advantage of an enduring nature; (b) that the expenditure was made fo .....

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fore, the CIT(A) correctly held that the amount cannot be treated as contingent liability by following the dicta of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (supra) wherein it has been held as under: It is not possible to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with regard to the quantum of liability etc. An assessee who follows .....

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nture 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 Industrial Development Corporation 225 ITR 792 and M/s. Brook Bond India Ltd. 225 ITR 798 and CIT(A) on appeal, further allowed the claim of deduction and as such this appeal by the revenue. 10. The learned DR contended that the CIT(A) has failed to distinguish partly convertible debentures and fully convertible debentures furnished and therefo .....

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ee. It needs to be mentioned that debenture or expenses thereof is not an expansion of capital base of the assessee. It is a loan which is to be returned and therefore the decision in Punjab State Indl. Development Corpn. Ltd. (supra) and Brook Bond India Ltd. cannot come to the help of the Revenue. The stamp duty towards debenture is nothing but done with the intention of furthering of business of the assessee. As such, therefore, the said expenditure would have to be considered as revenue in n .....

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