2017 (7) TMI 106

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....e bankers for securing timely repayment of credit facility and loan from Financial Institutions for the purposes of machinery and equipments, is not a revenue expenditure." 3] The learned counsel for the Assessee submits that the Assessee is a ongoing concern. To expand its existing business equipments and machinery were purchased by obtaining foreign exchange loan from financial institutions and deferred credit facilities under IDBI Bills discounting scheme. The company was required to secure by way of guarantee, from its bankers, the timely repayment of the loan. For these services, it had to pay guarantee commission to the banker amounting to Rs. 7,52,267/, which was claimed as revenue expenditure. 4] The learned counsel relies on ....

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....a revenue expenditure. While saying so, the High Court summed up the reasoning in support of its conclusion as follows : "The expenditure incurred for the purchase of the machinery was undoubtedly capital expenditure, for it brought in an asset of enduring advantage. But the guarantee commission stands on a different footing. By itself, it does not bring into existence any asset of an enduring nature nor did it bring in any other advantage of an enduring benefit. The acquisition of the machinery on instalment terms was only a business exigency. If interest paid on a credit purchase of machinery could be held to be revenue expenditure, we fail to see how guarantee commission paid to a bank for obtaining easy terms for acquisition of....