TMI Blog2006 (2) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT] , whereunder it is held that there is no distinction between discount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be revenue expenditure, entitled to be spread over the period of debentures and consequently, allowable as deduction in a particular assessment year. Thus, we do not see any question of law much less a substantial question of law arises for consideration. Hence, finding no reason to interfere with the orders of the Tribunal, both the appeals stand dismissed. - HON'BLE P. D. DINAKARAN., P. P. S. JANARTHANA RAJA, JJ For the Appellant : Pushya Sitaraman, Adv. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, on the facts and circumstances of the case, the Tribunal was right in holding that the premium payable on actual redemption of debentures in future years is to be spread over and part of it is allowable as a deduction in this assessment year? T. C. (A) No. 209/06: 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the expenditure incurred for issue of debentures in earlier years is to be spread over and allowed as a deduction in this year? 3. While the first question is related to the deduction of the premium payable on actual redemption of debentures and spreading over the period of the debentures, the second question relates to the deduction of the expenditure incurred for issuing debentu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of its business in order to generate funds for its business activities. The amounts so obtained by issue of debentures are used by the company for the purposes of its business. Hence, the liability to pay the discount would therefore he a revenue expenditure. 5.1 The issue whether a particular expenditure should be treated as capital expenditure or revenue expenditure incurred for the purpose of business must be determined on consideration of all the facts and circumstances of the case and by application of the principles of commercial trading in the context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on, or conduct of the business, that it may be regarded as an integral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of debentures allowed by the Tribunal is in accordance with the law laid down by the apex court in the case of Madras Industrial Investment Corporation Ltd. v. CIT reported in [1997] 225 ITR 802. 9. Similar view was also taken by the Calcutta High Court in the case of National Engineering Industries Ltd. v. CIT reported in [1999] 236 ITR 577 wherein it has been held as follows (headnote) : There is no distinction between a discount and a premium. The result in both is that something over and above the face value and the specified interest is paid, the accounting procedure in one case being by way of a preliminary deduction from the mentioned amount, and the accounting procedure in the other case being an addition at the end over the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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