2017 (3) TMI 1390

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....sideration: "(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was in admitting and allowing a new claim of deduction, being expenses incurred on issue of Foreign Currency Convertible Bonds, though the same was not claimed in the return of income filed by the assessee nor any revised return of income was filed by it for claiming the same, by relying on the decision of the Supreme Court in Goetz India v/s. CIT 284 ITR 323? (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing the expenditure incurred on issue of Foreign Currency Convertible Bonds (FCCB) without appreciating that FCCBs are equity linked debt instruments that can be converted into e....

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....issue is expenditure incurred to obtain a loan. In such circumstances, even if the FCCB are convertible into equity at a later date, yet on the date of its issue, it is a loan. Therefore, expenditure incurred thereon is revenue in nature. The Tribunal placed reliance upon the decision of the Rajasthan High Court in CIT v/s. Secure Meters Ltd., 321 ITR 611 while allowing Respondent-Assessee's claim. (iii) Mr. Chanderpal, learned Counsel appearing for the Revenue contends that the issue of FCCBs had inherent in it the option to convert bonds into equity. Therefore, same would have an effect on the capital base of the Respondent. In the circumstances, the expenditure incurred on the issue of FCCBs should be considered as capital expenditu....