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TMI Blog2017 (5) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of the expenditure incurred on account of sponsorship. During the course of hearing, no evidence is filed before the Tribunal, therefore find no infirmity in the order of CIT(Appeals). Accordingly, the order of CIT(Appeals) is confirmed in this regard. - Decided against assessee. - ITA No.531/Bang/2017 - - - Dated:- 26-5-2017 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER For The Appellant : Shri S.V. Shivarama Iyer, CA For The Respondent : Smt. Swapna Das, Jt.CIT(DR)(ITAT)-2, Bengaluru ORDER This appeal is preferred by the assessee against the order of CIT(Appeals) inter alia on the following grounds:- Ground 1: General 1.1 The order of the learned CIT(A)is erroneous and bad in law as it confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 was disallowed by the Company as the said amount was incurred towards charges to ROC, as the Company in its Return of Income itself had voluntarily disallowed the said amount. Ground 3: Sponsorship charges 3.1 The learned CIT(A) has erred in confirming the order of the AO in relation to sponsorship charges incurred by the Appellant. 3.2 The learned CIT(A) erroneously proceeded to uphold the contentions of the AO and erred in concluding that the sponsorship fee needs to be disallowed. 3.3 The learned CIT(A) and AO have erred in facts and in law to appreciate that the Company is engaged in the business of real estate development and to project its brand it is required to incur the advertisements through sponsorship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Hon ble Rajasthan High Court which was followed by the Hon'ble jurisdictional High Court in the case of CIT v. ITC Hotels Ltd. (supra) attained finality. 3. With regard to sponsorship charges, it was contended that the assessee has paid the sponsorship charges on account of business need. The expenditure was incurred towards music festival to Technology Alumni Association which is an alumni association of IIT, Kharagpur, therefore the said expenditure was allowable as revenue expenditure. 4. On the other hand, the ld. DR has placed reliance upon the order of CIT(Appeals) with regard to expenditure incurred in relation to issue of debentures and with respect to disallowance of sponsorship expenses, the ld. DR has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the assessee has issued debentures for which ₹ 44 lakhs was claimed as deduction and it was considered that this aspect is settled by several decisions of various High Courts and it has been held by the Hon ble Supreme Court in India Cements Ltd. v. CIT reported in [1966] 60 ITR 52, that a loan is not an asset or advance of enduring nature and the purpose of taking loan is totally an irrelevant consideration and hence the deduction on account of interest on loans cannot be denied. Then, the learned Tribunal also proceeded to rely upon another judgment of the Jaipur Bench of the Tribunal in the case of Rajasthan Financial Corporation v. Deputy CIT [1997] TW- 501, holding that the expenditure incurred for raising capital through bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loan obtained is not an asset or advantage of an enduring nature ; (b) that the expenditure was made for securing the use of money for a certain period ; and (c) that it is irrelevant to consider the object with which the loan was obtained. Thus, it was held that the expenditure incurred in procuring the loan was revenue expenditure within section 10(2)(xv) of the old Income-tax Act, which corresponds to section 37 of the present Act. By going through the said judgment, it further transpires that the Hon'ble Supreme Court also proceeded to examine the aspect of purpose of raising loan and its immediate or subsequent utilisation for different purpose and examined that even if a loan is raised for purchasing raw material and afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebentures results in repayment of loan and issuance of shares. This is one aspect of the matter. In our view, the other more important aspect of the matter is that the Hon ble Supreme Court in India Cements' case [1966] 60 ITR 52 has clearly excluded this aspect from consideration by holding that it is irrelevant to consider the object with which the loan was obtained. 9. Admittedly, the debentures when issued is a loan and, therefore, whether it is convertible or non-convertible does not militate against the nature of the debenture, being loan and, therefore, the expenditure incurred would be admissible as revenue expenditure. 6. Against this judgment, a SLP was filed and the same was dismissed by the Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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