TMI Blog2020 (10) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not incurred an expenditure of ₹ 5 Crores but has merely issued debentures at a discount. The redemption of debenture takes place in stages over a period of time and discount on debenture results in enduring benefit during the period of debentures - expenditure incurred in creating an enduring benefit does not create any asset or add value to existing asset. There was no creation of capital asset, which would result in an advantage of enduring benefit by discount on debentures. Therefore, the assessee is entitled to deduction from the income for the current year only which is liable to be redeemed in the first year as against the entire discounts. The benefit of discount to the assessee is instant as assessee paid lesser am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Madras Industrial Investment Corporation Ltd. Vs. CIT (225 ITR 802) would apply to all cases irrespective of difference in facts and would prevail over later judgment of the supreme Court in the case of CIT VS. General Insurance Corporation (286 ITR 232)? 2. Facts leading to filing of this appeal briefly stated are that the assessee is a public limited company engaged in the business of manufacture of metal package and cans. The assessee filed the return of income for the Assessment Year 2006-07 and claimed deduction of ₹ 5 Crores, being the discount on the issue of debentures. It was the case of the assessee before the Assessing Officer that during the Previous Year, the assessee had issued ₹ 38 Lakhs, 9% secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia held that there was no fresh flow of funds in case of assessee and therefore, the discount on the debentures is revenue expenditure and is deductible in the year of its incurrence. The appeal preferred by the assessee was allowed. Being aggrieved, the revenue filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 02.08.2013 inter alia held that reliance placed by Commissioner of Income Tax (Appeals) on the decision of the Supreme Court in the case of 'COMMISSIONER OF INCOME-TAX, MUMBAI VS. GENERAL INSURANCE CORPORATION', (2006) 156 TAXMAN 96 (SC) is not justified as the aforesaid decision relates to expenses on the issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over a period of time, the expenditure should be spread over. Our attention has also been invited to decision of the Supreme Court in 'TAPARIA TOOLS LIMITED VS. JOINT COMMISSIONER OF INCOME TAX', (2015) 372 ITR 605 (SC). 5. On the other hand, learned counsel for the revenue submitted that the assessee has not actually incurred expenditure of ₹ 5 Crores and has merely issued the debentures at a discount. It is further submitted that the decision relied upon by the assessee in case of TAPARIA TOOLS LIMITED supra has no application to the fact situation of the case as in the aforesaid decision, the Supreme Court was dealing with actual payment of interest in the form of upfront payment, whereas, in the instant case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S LIMITED supra , the Supreme Court in paragraph 17 of the decision held that it is conscious of the principle that normally revenue expenditure is to be allowed in the same year, in which it is incurred at the instance of the assessee who wants spreading over the court can allow the assessee that benefit when it is found that there was a continuing benefit to the business of the company over the entire period and the aforesaid benefit can only be applied if the principle of matching concept is satisfied. 7. In the instant case, the assessee has not incurred an expenditure of ₹ 5 Crores but has merely issued debentures at a discount. The redemption of debenture takes place in stages over a period of time and discount on debenture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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