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TMI Blog2008 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Court was delivered by K.RAVIRAJA PANDIAN, J-1. This appeal has been filed against the order of the Income Tax Appellate Tribunal in I.T.A.No.141/Mds/2004, dated 13.10.2006. The relevant assessment year is 2000-01. 2. The assessee-Company filed return of income for the assessment year 2000-2001 on 28.11.2000 declaring a gross total income of Rs.18,98,72,520 and after setting off an unabsorbed depreciation from the assessment year 1994-1995, arrived at a net taxable income of Rs.Nil. The assessee inter alia claimed deduction of expenditure incurred on issue of debentures and collection of fixed deposits as revenue expenditure. The Assessing Officer disallowed the same, as also the depreciation on standby machinery. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. 6. As far as the expenses relating to obtaining fixed deposit is concerned, the issue was decided as revenue expenditure by the Division Bench of this Court in COMMISSIONER OF INCOME TAX VS. SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LTD., reported in [2007] 292 ITR 362, wherein this Court held as follows:- " .... For deciding the issue that the expenses relating to obtaining fixed deposits are closely linked with the business requirement of the assessee, it is apposite to have a cursory look on the decided case-laws on this point. In India Cements Ltd. v. C.I.T. [1966] 60 ITR 52 (SC), while deciding the nature of the amount spent towards stamps, registration fees, lawyer's fees, etc., for obtaining loan, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by issue of shares is different from obtaining loan by debentures. The Bombay High Court in C.I.T. v. Mahindra Ugine and Steel Co. Ltd. [2001] 250 ITR 696 considered the allowability of stamp duty paid on debenture issue as business expenditure and held that the expenditure is revenue in nature. In that case, attack was made by the Revenue on the strength of section 35D of the Act which deals with amortisation of certain preliminary expenses, and the Bombay High Court held that (page 698): "Section 35D deals with amortisation of certain preliminary expenses. Under section 35D(1)(ii), it is laid down that after the commencement of the business any expenditure as described in section 35D(2), which is incurred in connection with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure." Considering the ratio laid down in the above said decisions, we are of the view that when the Tribunal has recorded a finding that the expenses relating to obtaining fixed deposits are closely linked with the business requirement of the assessee, such expenses are allowable expenses. We therefore hold that the Tribunal was right in holding that the expenses for obtaining fixed deposits from the public is revenue in nature. Accordingly, we answer the second question in the affirmative and against the Revenue. ...." 7. In respect of the second question of law, whether the standby assets are eligible for depreciation, the Division Bench of this Court in the case of COMMISSIONER OF INCOME-TAX VS. SOUTHERN PETROCHEMICAL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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