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TMI Blog2014 (7) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... on was not permissible - a possible view taken by the AO should not have been termed as prejudicial to the interest of the revenue – thus, no substantial question of law arises for consideration – Decided against Revenue. - Income Tax Appeal No. 272 of 2012 - - - Dated:- 17-6-2014 - S. C. Dharmadhikari And B. P. Colabawalla,JJ. For the Appellant : Mr. Tejveer Singh For the Respondent : Mr. Prakash Shah with Jas Sanghavi i/b. PDS Legal ORDER P. C. 1] We have heard Mr. Singh, learned counsel appearing on behalf of the revenue in support of this appeal and Mr. Shah, learned counsel appearing for the respondent. 2] The assessment year in question is 1998-99. The Tribunal has allowed the assessee's appeal by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an order on 3rd December, 2008. Mr. Singh submits that the issue was not concluded inasmuch as the Assessing Officer failed to note the fundamental fact that this FCCBs were convertible. They may be convertible at the option of the FCCBs holders. That option could have been exercised within a period of one month from the date of the issue of the convertible bonds but that itself makes the said Bonds equity shares. Once the FCCBs were capable of being converted, then, the expenditure incurred in relation thereto, cannot be said to be revenue expenditure. That could have augmented the share capital of the company, and therefore, the expenditure ought to have been classified as capital expenditure. 6] On the other hand, the assesee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as per the terms and conditions of the issue only at the option of the FCCBs holders. That option could have been exercised at any time after a period of one month from the date of issue. As per the terms and conditions of the issue, the FCCBs which remained to be converted into equity shares were redeemable at the premium of 19.38% at the end of 5 years from the date of issue. Thus, conclusion reached by the Assessing Officer was that the conversion is not automatic. In such circumstances, the Commissioner of Income Tax could not have concluded on same material that the FCCBs, in real sense, were equity shares right from the beginning and that the conversion of bonds was only a routine technical compliance as per the Regulations and gu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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