Upfront fee paid to bank to obtain loan for acquisition of capital asset allowable

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:

Please become a Premium member. If you are already a Premium member, login here to access the full content.