2012 (9) TMI 764

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....n deleting the disallowance of Rs. 13,60,459/- made by the Assessing Officer on account of interest paid on optionally convertible debenture. (ii) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (A) has erred in law and on facts in holding that interest paid on optionally convertible debentures is an ascertained liability. (iii) The order of the Ld. Commissioner of Income Tax (A) is erroneous and is not tenable on facts and in law. (iv) The appellant craves leave to add, alter or amend any / all of grounds of appeal before or during the course of the hearing of the appeal. 3. In this case Assessing Officer noted that assessee has issued one lac 6% Optionally Convertible Deb....

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....ation of Rs. 10 crores have been converted to 31250 equity shares of the company on 07.4.2008. However, Assessing Officer was of the opinion that the amount involved was contingent liability. He further noted that the contingent event in this case is conversion or non-conversion of debentures into shares by the debentures holder/ assessee. Assessing Officer referred to several case laws and make the addition of Rs. 13,60,459/-. 4. Against the above order the Revenue is in appeal before us. 5. Before the Ld. Commissioner of Income Tax (A) assessee submitted that the complete details of terms and conditions of Optionally Convertible Debentures (OCDs) as contained in a resolution passed with complete working of interest paid on these deb....

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.... were sent to the Assessing Officer for her comments. However, no written comments were received. Ld. Commissioner of Income Tax (A) further concluded as under:- "From a perusal of the above definitions it is clear that debentures are acknowledgement of debt by a company guaranteeing repayment with interest. Debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure. The only uncertainty in the optionally convertible debentures issued by the appellant is whether the debenture holder will go for conversion into shares or will continue to hold them as debentures. This uncertainty in no way impacts....