Case Law Details
CIT Vs M/s Apollo Tyres Ltd (Kerala High Court)
Conclusion: Loss on account of issuance of debentures at premium was expenses for the borrowing and therefore, was allowable as deduction u/s 37 in computing the income however, the loss suffered had to be applied in respect of each year covered by debentures, to an appropriate extent.
Held: Assessee claimed loss on account of issuance of debentures at premium in the year of maturity. AO held premium payable on redemption of the debenture was expenses for the borrowing and therefore, was allowable as deduction u/s 37 in computing the income however, the benefit of the money borrowed through debentures was derived by assessee over a period of eight years thus, the same was allowed over a period of eight years. It was held assessee was not correct in saying that it was a liability which would happen only on maturity of debentures. The liability was certain and was already undertaken; quantum of which was also certain and known. By virtue of this, the extent of loss suffered had to be applied in respect of each year covered by the debentures, to an appropriate extent.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
Annexure C order dated 09.09.2009 passed by the Income Tax Appellate Tribunal, Cochin Bench in the appeal preferred by the assessee, virtually unsettling Annexure A order passed by the Assessing Officer and Annexure B order passed by the Commissioner of Income Tax [Appeals], both in favour of the Revenue, in respect of the assessment year 1999-’00 is put to challenge at the instance of the Revenue.
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