M/S Madras Industrial ... vs The Commissioner Of Income Tax,Tamil ... on 4 April, 1997
10. We have considered the rival submissions carefully and find that
the Hon'ble Supreme Court in the case of Madras Industrial Investment
Corpn. Ltd. vs. CIT [supra] has held that discount given on the issue of
debenture is revenue expenditure and is to be allowed proportionately
in each year over a period for the redemption. That means any
expenditure in relation to debenture has to be treated as revenue
expenditure and has to be allowed over the tenure of debenture. Since
the tenure of debenture is 3 years, expenditure incurred in relation to
issue of debentures should be allowed over a period of three years.
6
Therefore, we set aside the order of the ld. CIT[A] and direct the AO to
allow proportionate expenditure on debentures in the year under
consideration.