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TMI Blog2021 (7) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... e company is a manufacturer and settler of white crystal sugar and its by-products. The assessee company filed its return of income on 30.10.2007 declaring NIL income. The case was selected for scrutiny and a notice under section 143(2) was issued and seved on the assessee company. During the course of scrutiny assessment proceedings, the Assessing Officer found that the aseesee had claimed an expense of Rs. 4,20,60,863/- in the profit and loss account under the head, extraordinary expenses. Since the payment of Rs. 10,00,000/- towards the research study to increase fuel efficiency and benefit of which is enduring in nature, the expenditure is patently of capital in nature. Hence, the Assessing Officer disallowed the entire expenditure. Ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture was crystalized during the relevant previous year when the assessee hijmself has classified the expenses as "prior period expenditure"? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in holding that one time payment made by the assessee towards prepayment premimum and interest compense is business expenditure in the nature of rEvenue Expeidutre?" 4.1 When the appeal is taken up for hearing, Mr. M. Swaminathan, learned Senior Standing Counsel appearing for the appellant fairly submitted that the substantial questions of law arise for consideration in the present appeal were already decided by the Hon'ble Supreme Court of India in its Judgment dated 14.01.2020 in Civil Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest on rupee loan to 15% per annum, effective from 1st April, 1995 upon payment of lump sum prepayment premium of Rs. 8 crores. The Assessing Officer has allowed deduction for Rs. 80 lacs being 1/10th of the prepayment premium of Rs. 8 crores during the year, applying the ratio of the Supreme Court decision in the case of Madras Industrial Corporation Vs. CIT, 225 ITR 802. The prepayment premium paid by the assessee to EDBI is in lieu of IDBI agreeing to reduce the rate of interest on the rupee loan aggregating to Rs. 170.76 crores. The same, in other words, represents upfront payment (present value) of differential rate of interest that would have been due on the loan if no restructuring of the debt had taken place. In terms of S. 36(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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