Upfront payment of interest on debentures is deductible fully in year of payment

CA Manish Soni A. Context: M/s Taparia Tools Limited (‘assessee’) issued debentures of Rs. 600 Lacs to various subscribers. The debenture holders were given following two options as regards payment of interest:- Interest @18% p.a. on a half yearly basis for 5 years or, One time upfront payment of Rs.55/- per debenture (FV Rs. 100/-). Two subscribers out of six opted for upfront payment. The assessee made a payment of Rs. 272 Lacs in assessment year (‘AY’) 1996-97 and Rs. 55 Lacs in AY 1997-98 towards upfront payment of interest to these 2 subscribers. It made 2 differ...