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TMI Blog2013 (12) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 - - - Dated:- 20-12-2013 - Shri G. D. Agrawal And Shri A. D. Jain,JJ. For the Petitioner : Shri Vivek Gupta For the Respondent : Ms. Y. Kakkar, Sr. DR ORDER Per A. D. Jain, Judicial Member: This is department's appeal for Assessment Year 2002-03, against the action of the Ld. CIT (A)-XVII, New Delhi in holding expenditure of Rs. 43,67,256/- on account of bond issue expenses to be a revenue expenditure vide his order dated 24.03.2010. 2. The Assessing Officer disallowed the bond issue expenses claimed by the assessee, observing that the expenditure was in the nature of capital expenditure. The Assessing Officer relied on the decision of the Hon'ble Supreme Court in 'Assam Bengal Cement Company', 27 ITR 34 (SC), to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's business in the relevant year, as correctly held by the Assessing Officer; that further, since amortization of such expenditure has not been provided for in the Act, the assessee's policy of writing off 20% of such expenditure every year, cannot be accepted; and that in keeping with "Banco Products (India) Ltd. vs. DCIT', 63 ITD 370 (Ahm.), since the money raised will go to increase the capital base/assets of the assessee, the expenditure is a capital expenditure rather than a revenue expenditure. 5. The ld. Counsel for the assessee, on the other hand, has contended that the bank is generally raising certain funds through floating of long-term unsecured, subordinated and redeemable Bonds which are interest bearing and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Years, CIT (A) deleted the addition made by the Assessing Officer and held that bond issue expenses are of revenue nature; that a copy of the order of the Ld. CIT (A) for Assessment Year 2000-01 is enclosed for reference; that during Assessment Year 2001-02, there has been no disallowance of bond expenditure; and that further, from Assessment Year 2003-04, the department itself is accepting the bond issue expenses as revenue expenditure and no addition has been made on this issue from Assessment Year 2003-04 onwards. 6. We have heard the parties and have perused the material on record. Undisputedly, during the year under consideration, the assessee bank raised an amount of Rs. 45 crores through issuance of 91 bonds, having a maturity pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raising of capital by issuance of shares. 8. In 'Premier Automobile vs. CIT', 80 ITR 415 (Bom), it has been held that Stamp Duty/registration/legal fee incurred for the issue of debentures is revenue expenditure. 9. In 'CIT vs. Secure Meters Ltd.', 221 CTR 405 (Raj), it has been held that expenditure incurred on issuance of debentures, whether convertible or non- convertible is allowable as a revenue expenditure. Since, in keeping with 'India Cement Ltd.' (supra), there is no asset or advantage of enduring nature involved, 'Banco Products' (supra), is of no avail to the department. Moreover, as noted above, the Hon'ble Rajasthan High Court, in 'Secure Meters Ltd.' (supra), has held that expenditure incurred on issuance of convertible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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