Interest on convertible debentures are allowable expenditure

CAE Flight Training (India) Pvt. Ltd. Vs DCIT (ITAT Bangalore)

Held that interest paid on convertible debentures are allowable as expenditure u/s. 36(1)(iii) of the Act. Such interest cannot be treated as interest on equity.

Facts-

The only issue raised by assessee is in respect of treating Compulsory Convertible Debentures (CCDs) as equity and holding that no interest is payable on equity capital thereby computing the ALP of interest as Nil.

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