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2017 (1) TMI 1211 - RAJASTHAN HIGH COURT

2017 (1) TMI 1211 - RAJASTHAN HIGH COURT - TMI - Expenditure of interest payment made towards interest on loans borrowed to finance the cost of its expansion scheme - revenue expenditure OR capital expenditure - Held that:- As decided in Secure Meters Ltd.case [2008 (11) TMI 66 - HIGH COURT RAJASTHAN] admittedly the debentures when issued is a loan, and therefore, whether it is convertible, or non-convertible, does not militate against the nature of the debenture, being loan, and therefore, the .....

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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 interest and financial/back charges as revenue expenditures when the said expenditure were pertaining to interest and bank charges which wer .....

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e justified in allowing the expenditure of interest payment made towards interest on loans borrowed to finance the cost of its expansion scheme treating it as revenue expenditure? 3. Counsel for the respondent, Ms. Drishti has pointed out that the matter is squarely covered by the decision of this Court in the case of Commissioner of Income Tax vs. M/s Modern Denim Ltd. in DB Income Tax Appeal No.94/2006, decided on 20.09.2016, along with connected matter. 4. The decision in the case of Commissi .....

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t 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 .....

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CIT (A) were justified in law and have not acted perversely in holding the expenditure of ₹ 3,91,79,683/- as revenue expenditure allowable deductions u/s. 37(1) when the said expenditure were pertaining to convertible debentures to be converted into shares issued for raising capital for unit which has not started production and was in the process of installation? (II) Whether in the facts and circumstances of the case the ITAT and CIT (A) were justified in law and have not acted perversely .....

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l for the respondents Mr. Sunil Nath has relied 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 ce .....

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ome Tax, Bombay City I Vs. Aniline Dyestuffs and Pharmaceuticals Pvt. Ltd. [1982] 138 ITR 844 (Bom.) 13) Commissioner of Income Tax Vs. Modi Industries Ltd. [1992] 200 ITR 342 (Del) 14) Commissioner of Income Tax Vs. Mahindhra Ugine and Stell Co. Ltd. [2001] 250 ITR 84 (Bom) 15) Commissioner of Income Tax Vs. Tarai Development Corporation Limited. [1994] 421 ITR 205 (Allahabad) 16) Commissioner of Income Tax Vs. Southern Petrochemical Industries Corporation Ltd. [2009] 311 ITR 202 (Mad) 17) Comm .....

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