TMI Blog2017 (1) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 17-1-2017 - K. S. Jhaveri And Vinit Kumar Mathur, JJ. For the Appellant : Mr. K.D. Mathur on behalf of Mr. R.B. Mathur For the Respondent : Ms. Drishti Parnami on behalf of Mr. Sandeep Taneja JUDGMENT Per Hon ble Jhaveri J. 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeals filed by the revenue. 2. This Court while admitting the appeals has framed the following substantial questions of law: D.B. Income Tax Appeal No. 572 / 2008 (admitted on 5.12.2008) (i) Whether in the facts and circumstances of the case, the ITAT and CIT(A) were justified in law and have act perversely in holding the expenditure towards int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacturing and sale of Denim Fabric. The assessee has claimed revenue deduction on issue of fully convertible debenture during the relevant previous assessment year but the AO has not allowed the claim by observing that issue of convertible debenture is a capital expenditure as the same amounts to expenditure incurred for the issue of share capital. In first appeal, CIT (A) allowed the claim of the assessee by observing that provisions of Section 35D of the Act had no application in respect of the aforesaid expenditure as the same was otherwise allowable revenue deduction. The CIT (A) also observed that the said expenditure was incurred on issue of debentures and the fact that the same were convertible into shares after a period of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the following decisions: 1) Commissioner of Income Tax Vs. Havells India Ltd. [2013] 352 ITR 376 (Delhi) 2) Commissioner of Income Tax Vs. Secure Meters Ltd. [2010] 321 ITR 611 (Raj) 3) Commissioner of Income Tax, Udaipur Rajasthan Vs. Secure Meters Ltd. [SLP No. 10548/2009] 4) Commissioner of Income Tax Vs. M/s. Instrumentation Ltd. [MANU/RH/0467/2013] 5) Commissioner of Income Tax Vs. Ranbaxy Laboratories Ltd. [MANU/DE/5061/2013] 6) India cements Ltd. Vs. CIT AIR 1996 SC 1053 7) Madras Industrial Investment Corporation Ltd. Vs. Commissioner of Income Tax Tamil Nadu 1, Madras (1997) 4 SCC 666 8) Commissioner of Income Tax Vs. East India Hotels Ltd. [2001] 252 ITR 860 (Cal.) 9) Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntures, inasmuch as if the debenture is converted into shares, then it partakes the character of capital, and in that event, the expenditure, and would not be revenue expenditure, and would be capital expenditure. Learned Counsel for the assessee informs, that though it has not come on record so far, but as a matter of fact the debentures issued were of convertible nature. Then, the argued, relying upon the judgment of Calcutta High Court in CIT v. East India Hotels Ltd. [2001]252ITR860(Cal), that the expenditure incurred, even in raising loan by convertible debenture would also be admissible as revenue expenditure. The Calcutta High Court had adopted the reasoning, that conversion of debentures results into repayment of loadn and issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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