M/s Escorts Ltd. Vs ACIT (ITAT Delhi)
Conclusion: Any expenditure incurred for obtaining loan was allowable as revenue expenditure even if the loan was intended for acquiring a capital asset. Thus, upfront fee paid to bank was thus allowable.
Held: Assessee claimed upfront fees paid to bank during year under consideration. AO disallowed the same as capital expenditure. It was held that any expenditure incurred for obtaining loan was allowable as revenue expenditure even if the loan was intended for acquiring a capital asset. Upfront fee paid to bank was thus allowable.
FULL TEXT OF THE ITAT JUDGEMENT
Present Cross Appeals for Assessment Year (A.Y.) 2002-03 and appeals by Revenue for Assessment Year 2003-04 and 2005-06 have been preferred against following impugned order:
| S.No. | Assessment Year | Date of impugned order | Passed By |
| 1. | 2002-03 | 31/10/05 | CIT(A)-14 |
| 2. | 2003-04 | 02/03/10 | CIT(A)-3 |
| 3. | 2005-06 | 30/06/14 | CIT(A)-20 |
For the sake of convenience we shall first take up Cross Appeals filed by assessee as well as revenue for A.Y. 2002-03.
2. A.Y:2002-03
Brief facts of the case are as under:
Assessee is a company and filed its return of income on 31/10/02 declaring business loss of Rs. 53,21,28,126/-and income from capital gain amounting to Rs.5,48,47,495/-. The case was processed under section 143(1) of the Income Tax Act, 1961 (the Act) and subsequently selected for scrutiny. Accordingly notice under section 143(2) of the Act was issued. In response to statutory notices, representative of assessee appeared before Ld. AO and case was discussed.
2.1. Ld.AO observed that assessee is engaged in business of manufacturing and sale of tractors, shockers, railway equipment etc. and other trading activity.
2.2. After calling for various details and information and considering the same, Ld. AO made following additions in hands of assessee:
