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TMI Blog2008 (11) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ,JJ. Mr. K.K. Bissa, for the appellant / petitioner. Mr. Sanjay Jhanwar & Mr. Arun Bhansali, for the respondent. JUDGMENT This appeal has been filed by the Revenue against the order of the learned Tribunal dt. 21.12.2005, so far as it relates to Appeals no. 390 and 405. However, it is clarified, that as a matter of fact the appeal is confined to the order of the Tribunal so far as it relates to Appeal No. 405 only, which appeal was filed by the assessee, regarding the matter relating to assessment year 1996-97. We find from the perusal of para-9 of the order of the Tribunal, that it was conceded that the Revenue's appeal was infructuous, and was inadvertently taken, because the learned C.I.T. has decided the ground in favour of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in (2007) 11 SCC-126=290ITR-667, which judgment has subsequently been followed by the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Catapharma (India) (P) Ltd. reported in (2007) 11 SCC-145. A look at the judgment in Lakshmi Machine's case shows, that therein it was clearly held, that the legislature intended to exclude items like commission and interest from deduction, on the ground, that they did not possess any element of "turnover", even though commission and interest emanated from exports. The words "total turnover" in Section 80-HHC have to be read as part of the formula, which sought to segregate the "export profits" from the "business profits". Therefore, the formula has to be read in entirety. In that formula th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the decision of the Hon'ble Supreme Court, in Brooke Bond India Ltd. Vs. CIT reported in 225 ITR-798 is not applicable to the facts of the instant case, because that was a situation in which expenditure on issue of shares was held to be ineligible for deduction, while the assessee has issued debentures for which Rs. 44.00 lacks 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 Cement Vs. CIT reported in (1996 ) 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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of holding, that some of the judgments were wrongly decided. Then, the Hon'ble Supreme Court proceeded to hold as under:- "10. To summarise this part of the case, we are of the opinion that : (a) 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.." 8. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expenditure incurred, even in raising loan by convertible debenture would also be admissible as revenue expenditure. The Calcutta High Court had adopted the reasoning, that conversion of debentures results into 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 Cement's case has clearly excluded this aspect from consideration, by holding, that it is irrelevant to consider the object, with which the loan was obtained. 10. 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 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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