TMI Blog2017 (1) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... the issues in favour of the assessee - D. B. Income Tax Appeal Nos. 91 of 2006, 432, 473, 477 And 565 of 2008. - - - Dated:- 4-1-2017 - Mr. K.S. Jhaveri And Mr. Vinit Kumar Mathur JJ. For the Appellant : Mr. R.B. Mathur For the Respondent : Ms Parinitoo Jain Judgment 1. By way of these appeals, the Department has challenged the judgment and order of the Tribunal whereby the tribunal while considering the matter had confirmed the order of C.I.T. (Appeal) and has allowed the appeal preferred by the assessee. 2. This court while admitting the appeals framed the following substantial question of law: Appeal No. 91/2006 Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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? (II) Whether in the facts and circumstances of the case, the ITAT and CIT(A) were justified in law and have acted perversley in holding the expenditure 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? Appeal No. 565/2008 (i) Whether in the facts and circumstances of the case, the ITAT and CIT(A) were justified in law and have not acted perve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed by the assessee on 29.11.1996. order u/s 143(3) was passed by the AO on 10.03.1999 determining the loss at ₹ 20,12,63,256/-. During the course of assessment proceedings the AO observed that assessee has claimed deduction of ₹ 33,20,47,371/- u/s. 36(1) (iii) being payment made towards interest on loans borrowed to finance the cost of its expansion schemes. The AO held these expenses in the nature of capital expenditure and disallowed the claims. The assessee also claimed deduction of ₹ 35,92,000/- u/s 37 being payment incurred on public issue. The AO held that these expenses cannot be treated as revenue expenditures and as such disallowed the same. The AO also disallowed the expenditure claimed by the assessee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business is set up or an existing business is expanded, the amount borrowed for such purposes enures to the assessee with enduring benefit. The assessee, therefore, could not treat it on such borrowed capital as revenue expenses. 7. The amount is to be deducted retrospectively and the question is required to be answered in favour of the Department. 8. However, learned counsel for the respondent-assessee has pointed out that the issue is by and large covered by the decision of this court in Commissioner of Income Tax Vs. M/S Modern Danim Ltd., D.B. Income Tax Appeal No.94/2006 decided on 20.09.2016 holding as under:- 5. However, in view of the decision of this Court in Secure Meters Ltd. [2010] 321 ITR 611 (Raj) (supra) more partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue expenditure. 6. Since the SLP against the said judgment also stands dismissed, in that view of the matter, the same decision is binding on the parties, therefore, both the questions are answered in favour of assessee and against the Department. 9. Another decision of this court in the case of Commissioner of Income Tax Vs. Hindustan Zinc Limited (2004) 269 ITR 369 (Rajasthan) and decision of the Supreme Court in Commissioner of Income Tax Vs. Monnet Industries Ltd. {2013} 350 ITR 304 (SC). 10. We have heard learned counsel for the parties and considered their arguments. 11. It is true that contention which has been raised is considered by the Allahabad High court, however, in our view and looking to the explanation added ..... X X X X Extracts X X X X X X X X Extracts X X X X
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