TMI Blog2017 (7) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... orically came to the conclusion that the expenditure incurred for payment of guarantee commission is revenue expenditure. The act of borrowing money was incidentally to carrying on business. - Income Tax Reference No. 128 of 2000 - - - Dated:- 22-6-2017 - S. V. Gangapurwala And G. S. Kulkarni, JJ. Mr.Rohan Deshpande for the Applicant Mr.Charanjeet Chanderpal a/w.Ms.Minal Lad and Ms.Namita Shirke for the Respondent ORDER PER COURT 1] The matter pertains to the Assessment Year 198485. 2] Reference is made to this Court on the following question. Whether on the facts and in the circumstances of the case, the Appellant Tribunal was justified in law in holding that the entire guarantee commission paid to the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions. 7] This Court in Kinetic Engineering Ltd (supra) has observed as under; 11. We have also perused the decisions of the High Courts of Andhra Pradesh, Madras, Karnataka and Calcutta referred to above. The Andhra Pradesh High Court, in Addl. CIT vs. Akkamba Textiles Ltd. (supra) has held that the guarantee commission paid by the assessee in connection with the purchase of machinery was a revenue expenditure and not a capital expenditure. While arriving at this conclusion, the High Court followed the decision of the Supreme Court in India Cements Ltd. (supra). In Sivakashi Mills Ltd. vs. CIT (supra) the Madras High Court also held that guarantee commission paid to a bank for obtaining a loan for acquisition of machinery was a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial vehicles. For expansion of its business, it obtained foreign exchange loan from financial institutions and deferred credit facilities under IDBI bills discounting scheme. In the ordinary course of business the company was required to secure by way of guarantee from its bankers timely repayment of the said loan and for the said purpose the company had to pay the guarantee commission. 9] The only question is whether the guarantee commission paid to the bankers for securing timely repayment of credit facility and loan from financial institutions for the purpose of machinery and equipments is revenue expenditure. 10] The Division Bench of this Court in case of Kinetic Engineering Ltd (supra) was dealing precisely with the said issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
