TMI Blog2016 (2) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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.(2012 (9) TMI 764 - ITAT DELHI ) while considering the issue of fully convertible debentures has deleted the addition concluding there was no contingency involved in the accrual 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 MEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of various loans and CDR packages. He further held that these charges were not paid during the year and infact, the assessee has deposited the 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 the instant year. The learned AR however supported the finding of the CIT(A) by relying upon the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end 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 for securing the use of money for a certain period; and (c) that it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure within section 10(2)(xv) 7. So far as the fact that the appellant has disputed liability by keeping the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 therefore, any expenditure incurred considering the stamp duty charges for issue of debentures are fully convertible debentures and revenue in nature. The AR however, supported the order of the CIT(A) and contended that debentures are loans and therefore, any expenditure incurred for raising loan is eligible expenditure. 11. Having considered the rival submissions, we notice that the CIT(A) deleted the addition by holding as under: 9. It may not be reiterated that there is no submission from the assessee. It needs to be mentioned that debenture or expenses thereof is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure. The only uncertainty in the optionally convertible debentures issued by the assessee is whether the debenture holder will go for conversion into shares or will continue to hold them as debentures. Ld. Commissioner of Income Tax (A) rightly held that this uncertainty in no way impacts the assessee company's liability to pay interest till the date of conversion. Ld. Commissioner of Income Tax (A) has rightly held that the case laws referred by the Assessing Officer were not applicable on the facts of the present case. Accordingly, in the background of the aforesaid discussion, we do not find any infirmity in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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