TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court allows loan prepayment premium deduction as revenue expenditure, dismisses appeal by revenue. Assessee prevails on front end fees disallowance.</h1> <h3>Commissioner of Income Tax, Kolkata II Versus M/s. Kesoram Industries Ltd.</h3> Commissioner of Income Tax, Kolkata II Versus M/s. Kesoram Industries Ltd. - TMI Issues:1. Disallowance of premium paid on prepayment of loan2. Disallowance of front end fees or processing fees for obtaining a loanAnalysis:Issue 1: Disallowance of premium paid on prepayment of loanThe appeal by the revenue concerns the deletion of the disallowance of the premium paid on prepayment of a loan by the assessee. The revenue argued that this expenditure is capital in nature and should not be treated as revenue expenditure. However, the Tribunal, following its earlier order in a similar case, upheld the deletion of the addition. The Court agreed with the Tribunal's decision, stating that the premium paid for prepayment of a loan to reduce interest liability does not amount to acquisition of any asset and should be treated as revenue expenditure. Therefore, the appeal was dismissed, and the first question was answered in favor of the assessee and against the revenue.Issue 2: Disallowance of front end fees or processing fees for obtaining a loanThe second question raised in the appeal was similar to a case from a different assessment year, which was decided in favor of the assessee. The Court referenced this earlier decision and answered the second question in the negative and in favor of the assessee and against the revenue. This decision was based on detailed reasoning provided in the previous case, leading to the conclusion that the front end fees or processing fees for obtaining a loan should not be disallowed as claimed by the revenue.In conclusion, the High Court of Calcutta upheld the Tribunal's decision to allow the deduction of the premium paid on prepayment of a loan as revenue expenditure and dismissed the appeal by the revenue. The Court also ruled in favor of the assessee regarding the disallowance of front end fees or processing fees for obtaining a loan based on a previous decision.
TaxTMI 