Assessing Officer disallowed broken period interest paid by assessee on ground that it formed part of price of asset purchased, which had already been debited to profit and loss account. The order of the AO is affirmed by CIT(A) and Tribunal. On appeal the court held that\u00a0\u00a0 Supreme Court in case similar to assessee held that since said securities were treated as stock-in-trade, broken period interest could not be considered as capital expenditure and would have to be treated as revenue expenditure, which could be allowed as deduction. Relied on Bank of Rajasthan Ltd v.CIT (2024) 301 Taxman 463 (SC), CITY Bank NA\u00a0 (2003) 130 Taxman\u00a0 334\/ 264 ITR 18 (Bom)(HC), American Express International Banking\u00a0 Corporation (2002) 125 Taxman 488\/ 258 ITR 601 (Bom)(HC).\u00a0 Assessee had made a rights issue of Fully Convertible Debentures (FCDs) and in such connection, had incurred expenditure on account of printing expenses, advertisement, professional fees, stamp duty and filing fees, bank charges, packages, etc..\u00a0 Assessing Officer rejected\u00a0 claim on ground that real intention of assessee was to increase its capital and not to raise borrowed capital. The order of the AO is affirmed by the CIT(A) and Tribunal. On appeal the Court held\u00a0\u00a0\u00a0 in case similar to assessee, High Court held that debentures were to be converted in near future into equity shares, expenditure incurred needs to be allowed as revenue expenditure. Followed CIT v. Faze Three Ltd (ITA No. 1761 of 2014 dt 16-3 2017, CIT v. Secure Meters Ltd (2010) 321 ITR 621(Raj)(HC) CIT v. Havells India Ltd (2012) 208 Taxman 114 \/352 ITR 376 (Delhi)(HC).\u00a0 (AY. 1993-94)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 37(1) : Business expenditure-Securities held as stock in trade-Interest paid for broken period allowable as deduction-Rights issue of Fully Convertible Debentures (FCDs)-Expenditure on account of printing expenses, advertisement, professional fees, stamp duty and filing fees, bank charges, packages, etc-Allowable as deduction. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-54797","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-efP","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/54797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=54797"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/54797\/revisions"}],"predecessor-version":[{"id":57185,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/54797\/revisions\/57185"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=54797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=54797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=54797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}