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Banco Products (India) Ltd. vs Deputy Commissioner Of Income Tax on 28 May, 1997 cites

India Cements Ltd., Madras vs Commissioner Of Income-Tax, Madras on 8 December, 1965

In India Cement Ltd. vs. CIT (supra) on which heavy reliance has been placed by the learned counsel for the assessee, the apex Court was dealing with a case of an appellant who had obtained a loan of Rs. 40 lakhs from the Industrial Finance Corporation secured by a charge on its fixed assets. In connection therewith it spent a sum of Rs. 84,633 towards stamp duty, registration fee, lawyer's fee, etc. and claimed this amount as business expenditure. The Hon'ble Supreme Court held that the amount spent was not in the nature of capital expenditure and was laid out or expended wholly and exclusively for the purpose of the assessee's business and was, therefore, allowable as a deduction under s. 10(2)(xv) of the Indian IT Act, 1922. The act of borrowing money was incidental to the carrying on of business, the loan obtained was not an asset or an advantage of enduring nature, the expenditure was made for securing the use of money for a certain period and it was irrelevant to consider the object with which the loan was obtained. The Hon'ble Supreme Court further held that "obtaining capital by issue of share is different from obtaining loan by debentures". It is obvious that the Supreme Court was dealing with a case where loan was raised and the loan was in the nature of debt. It was neither a case where issue of equity shares or convertible/partly convertible debenture was involved. Before us is the case where expenditure was admittedly incurred on issue of equity shares and partly convertible debentures.
Supreme Court of India Cites 20 - Cited by 495 - S M Sikri - Full Document
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