2009 (7) TMI 714

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....JUDGMENT The judgment of the court was delivered by Adarsh Kumar Goel J.- The following question of law has been referred for opinion of this court by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated January 19, 1988 in I. T. A. No. 45 of 1987, for the assessment year 1983-84 under section 256(1) of the Income-tax Act, 1961 (in short, "the Act") : ....

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....the claim of the assessee by treating the expenditure as capital expenditure on the ground that the debentures will be later converted into shares. The Commissioner of Income-tax (Appeals) upheld the claim of the assessee holding that the same was incidental to carrying on of business. The Tribunal affirmed the said view. Reliance was, inter alia, placed on the judgment of the hon'ble Supreme Cour....

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....sthan High Court in Secure Meters Ltd. [2009] 221 CTR 405  [2010] 321 ITR 611 to the effect that the issuance of convertible debentures was in fact a mode of repayment by way of issuance of shares. 5. No contrary view has been shown on behalf of the Revenue. The expenditure on issue of debentures is incurred in the process of carrying on business as raising of funds itself is necessary for....