2013 (12) TMI 1361

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....ing that the expenditure was in the nature of capital expenditure. The Assessing Officer relied on the decision of the Hon'ble Supreme Court in 'Assam Bengal Cement Company', 27 ITR 34 (SC), to conclude that the expenditure incurred on bond issue had resulted into an enduring benefit to the assessee and as such, it was capital expenditure. The Assessing Officer further observed that there was no provision for amortization of bond issue expenses and hence, even 20% of the expenses spread over a period of five years, as claimed by the assessee in its books of account, could also not be allowed; and that since no capital asset, either tangible or intangible, eligible for depreciation had been generated on account of such expenses, even depreci....

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....essee, on the other hand, has contended that the bank is generally raising certain funds through floating of long-term unsecured, subordinated and redeemable Bonds which are interest bearing and in raising such bonds, bank is incurring certain expenditure in the nature of rating fee, surveillance fee, miscellaneous expenses like printing, courier, publicity, stationery, stamp duties and arranger fee, etc. Such funds have been raised after getting the approval from Ministry of Finance, Government of India and are being used for the business purpose of the bank; that during Assessment Year 2002-03, the bank raised funds of Rs. 45 crore through issue of 9% bonds having a maturity period of 64 months which has been shown under Schedule-5-Other ....

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....ties and have perused the material on record. Undisputedly, during the year under consideration, the assessee bank raised an amount of Rs. 45 crores through issuance of 91 bonds, having a maturity period of 64 months. These bonds were shown as 'Other liabilities and provisions of Audited Annual Accounts.' It does not stand refuted that the accounts of the assessee bank were drawn up in accordance with the Banking Regulation Act. Also, without dispute, the interest paid or payable on the said bonds stands claimed and allowed as business expenditure. A similar issue stands decided in favour of the assessee by the CIT (A)'s Order for Assessment Year 2000-01 (supra),as also for Assessment Year 1998-99. For Assessment Year 2001-02, there was no ....