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TMI Blog2012 (4) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favor of assessee. Set off of short term capital loss against short term capital gain arising on sale of debentures and units - deduction u/s 80M without adjusting the loss on sale of shares – Held that:- Same has been decided in favor of assessee in view of decision in case of CIT Vs. Walfort Share and Stock Brokers P. Ltd. (2010 (7) TMI 15 - SUPREME COURT) Deletion of addition by Tribunal in value of inventory and goods in process made by A.O – Held that:- Matter is restored back to Tribunal for deciding afresh on the finding that there was no independent application of mind by the Tribunal. - INCOME TAX APPEAL NO.188 & 189 OF 2011 - - - Dated:- 20-3-2012 - DR.D.Y. CHANDRACHUD M.S.SANKLECHA, JJ. Mr.Vimal Gupta for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of debentures as revenue expenditure; (F) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition in value of inventory made by A.O.; (G) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition made in value of goods in process by AO; 2. The Appeal is admitted on questions A, E, F and G. By consent the appeal is taken up for hearing and final disposal. 3. As regards Question A, counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee are agreed that this question would have to be answered in favour of the Revenue and against the assessee in view of the judgment delivered today ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was paid related to Capital Repayment and could not be allowed as revenue expenditure. The CIT (A) held in favour of the assessee relying upon his order for AY 1991-92 which in turn was based on the judgment of the Calcutta High Court in Commissioner of Income Tax Vs. Tungbhadra Industries Ltd. (1994) 207 ITR 553 The CIT(A) directed the Assessing Officer to allow the deduction for premium actually paid during the previous year provided that no part of the said premium has been allowed as a deduction on a pro rata basis in the earlier years. In appeal, the Tribunal noted that the Non Convertible Debentures which were issued in the amount of ₹ 300 lakhs during the year ending 31 March 1985 were to be repaid after seven years of allot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the assessee had incurred an expenditure of ₹ 3 lakhs, by way of discount paid to the persons who had subscribed to the debentures, during the relevant previous year and whether the same was allowable as revenue expenditure. The High Court held that the discount of ₹ 3 lakhs did not represent any payment made to anyone so as to constitute expenditure. The High Court held that of the total discount of ₹ 3 lakhs, a discount of ₹ 12,500/- had been allowed by the Tribunal which the Department had not challenged. The High Court held that the balance of ₹ 2,87,500/- could not be considered as expenditure. 8. In appeal, the Supreme Court noted that the assessee had actually received an amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is fixed for the Non Convertible Debentures and upon which the debentures are to be redeemed is the flip side of a situation where the assessee issues debentures at a discount. In the case of a discount, the assessee has the benefit of the funds which are realised from the issue of the debentures, over the term of the debentures. In the case of a premium which the assessee pays, the premium paid on the date fixed for redemption is in consideration of the use of the funds by the assessee until such date as the debentures fall due for redemption. The principle which has been laid down by the Supreme Court in Madras Industrial Investment Corporation Ltd. to hold that the additional liability equivalent to a discount represents revenue e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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