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TMI Blog2012 (9) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) has rightly held that this uncertainty in no way impacts the assessee company's liability to pay interest till the date of conversion - in favour of assessee. - IT Appeal No. 2831 (Delhi) of 2012 - - - Dated:- 9-8-2012 - Shamim Yahya And C. M. Garg, JJ. Ajay Bhagwani for the Appellant B.R.R. Kumar for the Respondent ORDER Shamim Yahya, Accountant Member This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XXXIII, New Delhi dated 29.3.2012 pertaining to assessment year 2008-09. 2. The grounds raised read as under:- (i) On the facts and in the circumstances of the case the Ld. Commissioner of Income Tax (A) has erred in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of debentures issued. Assessee further submitted before the Assessing Officer that the expenditure involved was not a contingent liability, as the same was duly provided in the P L account and books of accounts and even the TDS was duly deducted and deposited and amount was payable as interest. Assessee further submitted that the funds were used wholly and exclusively for the purpose of the business of the assessee company and the same was allowable as per the provisions of section 36(i)(iii) of I.T. Act, 1961. Assessing Officer did not agree with the contention and found the same untenable. However, the Assessing Officer noted that one lac 6% Optionally Convertible Debentures (OCDs) of ₹ 10/- each at par issued on 30.1.2008 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er as to what is the contingency involved in the payment of interest on the said debentures. Assessee further submitted in the Tax Audit Report, the Auditors of the company had certified that no contingent liability is debited to P L account and that even in the notes to accounts no amount is shown as contingent liability. Assessee further submitted the copy of application filed u/s. 154 by the assessee before the Assessing Officer for rectification of disallowance interest paid in view of the fact that no contingency was involved. In this regard, assessee further submitted that the said application was not disposed of by the Assessing Officer till date. Ld. Commissioner of Income Tax (A) considered the above submissions and noted that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement with the Ld. Commissioner of Income Tax (A)'s finding that there was no contingency involved in the accrual of liability with reference to the interest on the debentures. Ld. Commissioner of Income Tax (A) rightly observed that debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure. The only uncertainty in the optionally convertible debentures issued by the assessee is whether the debenture holder will go for conversion into shares or will continue to hold them as debentures. Ld. Commissioner of Income Tax (A) rightly held that this uncertainty in no way impacts the assessee company's l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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