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8. As regards ground No.4, we find that the facts in the relevant A.Y are similar to the facts in the A.Y 2009-10 and for the detailed reasons given by us in the assessee's appeal for the A.Y 2009-10, this ground of appeal is to be allowed. For the purpose of convenience and ready reference, the relevant paragraphs of the ITAT order in ITA No.1689/Hyd/2012, dated 22.05.2018 are reproduced hereunder:

"6. As regards Grounds No. 11 to 18 are concerned, brief facts are that, during the F.Y 2006- 07, the assessee company has raised term funds from international market by issuing Foreign Currency Convertible Bonds (FCCBs) worth USD 25 Millions, which is having the convertible option to equity shares or repayment of bonds after 5 years. During the financial year relevant to the assessment year before us, the assessee stated that due to fluctuation of exchange currency, the company has incurred foreign exchange loss of Rs. 21,92,00,000/- on foreign currency convertible bonds (FCCB) and therefore the company has restated the bonds at the exchange rates prevailing at the year end and the ITA No 1714 of 2014 Country Club India Ltd Hyderabad.

thereof, it is seen that unsecured loans include FCCBs worth Rs. 101,72,00,000/-. Therefore, the above decision is clearly applicable to the f acts of the case before us. In the case of Gati Ltd. (cited supra), this bench was considered the nature of the expenses incurred for issuance of FCCBs and it was held as under:

" 2. Brief f acts of the case are that the assessee company, which is in the business of Cargo Transport and Trading, f iled its return of income f or the A.Y. 2007- 08 on 31.10.2007 decl aring a total income of Rs.15,54,67,315 and book prof it of Rs.2,62,85,309 under section 115JB of the Act. During the assessment proceedings under section 143(3) of the I.T. Act, the income of the assessee was determined at Rs.16,36,43,200. Subsequently, the CIT assumed jurisdiction under section 263 of the I.T. Act and directed the A.O. (i) to bring to tax the gain on account of f oreign exchange f luctuation of Rs.15,46,428 as income f rom other sources; (ii) to disal low gratuity of Rs.1,32,95,577; and (iii) to disallo w expenditure amounting to Rs.2,69,26,757 relatabl e to issue of f oreign currency convertible bonds. Aggrieved by the order of the Ld. CIT under section 263 of the I.T. Act, the assessee pref erred an appeal bef ore the ITAT. The ITAT vide orders dated 04.01.2013 in ITA.No.749/Hyd/2012 upheld the initiation of proceedings under section 263 of the I.T. Act and as f ar as the disallo wability of FCCB rel ated expenses, the Tribunal directed the A.O. to examine the issue of all owabil ity or other wise of the expenses, keeping in vie w the ratio of various decisions rel ied upon by both the parties and as discussed by the Tribunal in its order. Against the order of the ITAT, the assessee pref erred an appeal bef ore the Hon'bl e High Court but the Hon'ble High Court dismissed assessee's appeal holding that there was no substantial question of law involved in the matter. Theref ore, the A.O., while giving effect to the order of ITAT, re-examined the allowability of expenditure incurred by the assessee on issue of FCCBs and held that FCCB bonds were issued with an option to the bond holders to convert them to ordinary shares or to redeem their claim of bonds on 06.12.2011 at 147.882% of the principal . He observed that since the said bonds are convertible and have the characteristic of equity shares, proportionate expenditure on the issue of bonds has to be treated as capital expenditure. He f urther observed that the main purpose of FCCBs was f or expansion of their business, i.e., investment in wide ranging capital investment projects and the advantage that would accrue to the assessee f rom such capital investment would be of an enduring nature. He f urther observed that the bonds were not meant to be part of prof it earning process or a part of the working capital but was meant f or investment in the capital f ield such as off -shore acquisition, acquisition/ purchase of scrips, / investment in wholly owned subsidiaries etc., He theref ore, treated the expenditure of Rs.2,64,26,757 incurred on issue of the bonds as capital expenditure and accordingly, brought it to tax. Aggrieved, assessee f iled an appeal bef ore the Ld. CIT(A) who conf irmed the order of the A.O. and the assessee is in second appeal bef ore us.

ITA No 1714 of 2014 Country Club India Ltd Hyderabad.

3. The Ld. Counsel f or the assessee, Mr. Y. Ratnakar, while reiterating the submissions made by the assessee bef ore the authorities belo w, and submitted that the assessee company has issued unsecured Foreign Currency Convertible Bonds ("FCCB") on 05.12.2006 f or $ 20,000 mill ion US dollars and the bond holders were given an option to convert FCCBs into original shares on or bef ore 05.11.2011 and in the event the bond holder is not opting f or such conversion, he is entitled to redemption on 06.12.2014 at 147.882% of the bond amount. He submitted that the bonds were issued f or securing f unds f or business purposes incl uding expansion of the business and the amount received is thus an unsecured loan in the hands of the company. He submitted that the expenditure of Rs.2,64,26,757 incurred by the assessee company f or issuing these bonds is theref ore revenue expenditure. He also submitted that during the F.Y. 2006-07 relevant to the A.Y. 2007-08, the f unds collected by the assessee company continued to remain with the assessee onl y as a liability in the f orm of unsecured loans as none of the bond holders exercised any option f or conversion of their bonds into shares during the relevant f inancial year. He, f urther submitted that in the F.Y. 2007-08, the bonds to the extent of 5 million US dollars were converted into share capital as the bond holders exercised their option f or conversion during the said F.Y. 2007- 08 and this was al so decl ared in the public accounts f or the F.Y. 2007-08. He has submitted that the remaining outstanding amount in respect of the bal ance FCCBs has been f ully repaid on 31.12.2011 with premium to the bond holders which f act has al so been taken note of by the Commissioner in his order under section 263 of the I.T. Act. He has submitted that as the bonds were issued only f or the purpose of securing loan f inance, the assessee has not obtained any asset or advantage of any enduring nature and the expenditure mad e is f or securing the use of money in business f or certain period. He has submitted that it is irrel evant to consider the object f or which the l oan is obtained so long as it is f or the business purposes of the assessee, to consider the same as revenue expenditure. According to him, the utilisation of FCCB proceeds has nothing to do with capital of the company and theref ore, is al lowable as revenue expenditure. Thus, according to him, the f indings of the A.O. as wel l as the Ld. CIT(A) are erroneous. He pl aced reliance upon the f oll owing decisions in support of his contention.

8. The Hon'ble Karnataka High Court in the case of ITC Hotels Ltd., (cited supra) has al so considered the judgment of the Rajasthan High Court in the case of Secure Metres Ltd., (cited supra), to hold that even if the debentures were to be converted into the shares at a later date, the expenditure incurred on such convertible debentures has to be treated as revenue expenditure. We f ind that 'A' Bench of this Tribunal at Bangal ore in the case of M/s. Crane Sof tware International Ltd., Bangalore vs. DCIT, Circle-11(2) (cited supra) , has considered whether FCCB issue expenses are in the nature of capital or revenue and has held the same to be revenue in nature. Simil ar vie w has been expressed by the Hon'bl e Delhi High Court in the cases of CIT vs. Havells India Ltd., (cited supra) and al so DCIT vs. UAG Builders (P.) Ltd., Delhi (cited supra). We, theref ore, f ind that this issue is f airly covered by the above cited decisions. Hence, we hold that the expenditure incurred by the assessee on issue of FCCB is revenue expenditure allo wable under section 37(1) of the I.T. Act .