Calcutta High Court
C. I. T. Kolkata - Ii vs M/S. Yule Financing & Leasing Co. Ltd on 22 August, 2014
Author: Soumitra Pal
Bench: Soumitra Pal
ORDER SHEET
ITA No.851 of 2004
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
C. I. T. KOLKATA - II
Versus
M/S. YULE FINANCING & LEASING CO. LTD.
BEFORE:
The Hon'ble JUSTICE SOUMITRA PAL
The Hon'ble JUSTICE ARINDAM SINHA Date : 22nd August, 2014.
Appearance:
Mr. R.K. Chowdhury, Adv.
The Court :- This application under Section 260A of the Income Tax Act, 1961 has been preferred by the appellant-revenue against the order of the Income Tax Appellate Tribunal, "B" Bench, Kolkata dated August 6, 2014 in ITA No. 1859/Kol/2003, 1860/Kol/2003 and 1861/Kol/2003 relating to the assessment years 1996-97, 1997-98 and 1998-99 on the following question:-
"Whether in the facts and circumstances of the case the Learned Tribunal erred in law in deleting the disallowance of Rs.61,18,120/-, Rs.79,49,492/- and Rs.60,95,987/- representing Public Deposit Issue expenses by holding the same to be of in the nature of Capital Receipts for the assessment years 1996-97, 1997-98 and 1998-99?"2
Heard Mr. Chowdhury learned Advocate for the appellant. We find that the Tribunal while affirming the order passed by the CIT(A) had held as under:-
We have considered the rival submissions. The nature of business of the assessee company is that of a leasing company. The public deposits were accepted as Term Deposit from 3 to 5 years and, therefore, the Public Deposit Issue Expenses having been spread over a number of years, is quite reasonable. The public deposits are in the nature of loans taken by the assessee and are "unsecured loans" in the hands of the company. In the case of India Cement Ltd. reported in 60 ITR 52, the Hon'ble Supreme Court held that "a loan obtained cannot be treated as an asset or advantage for the enduring benefit of the business of the assessee. The act of borrowing was incidental to the carrying out of the business, the loan obtained is neither an asset nor any advantage of enduring in nature, the expenditure incurred for securing the loan of money for a certain period of time, and it is irrelevant to consider the object under which the loan was obtained. The expenditure is not in the nature of capital expenditure and was, therefore, an allowable deduction". The CIT(A) following the judgment of the Hon'ble Supreme Court in 60 ITR 52 has allowed the assessee's claim for deduction of these expenses by holding that the expenses incurred for obtaining the loan are revenue in nature and, therefore, allowable deduction. There being no mistake in the order of the CIT (A), we uphold the 3 same and the ground of appeal No.2 of the Revenue is dismissed.
We do not find any ground to interfere with the said order. In our view, no substantial question of law arises out of the order passed by the Tribunal.
Therefore, the application and the appeal are dismissed.
(SOUMITRA PAL, J.) (ARINDAM SINHA, J.) CS.