Case Law Details
Discount on deep discount debentures issued for construction of house property is allowable
ITAT held that the proportionate discount on deep discount debentures issued for construction of house property is in the nature of interest as defined under Section 2(28A) of the Income-tax Act, 1961 (the Act). Therefore, such interest would be allowable as deduction under the provisions of Section 24(b) of the Act while computing income from house property. The Tribunal relying on the Supreme Court’s decision in the case of Madras Industrial Investment Corporation Ltd. v Commissioner of Income Tax, 225 ITR 802 SC observed that the difference between the issue price and maturity value has to be spread over the debenture holding period. Accordingly, proportionate deduction should be allowed in computing income from house property.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
M/s. Litolier Properties Pvt. Ltd. Vs. Income tax Officer
ITA No.: 1278/Mum/2010 – Assessment Year : 2006-07
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