2005 (12) TMI 86

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....ssessee-company, in order to modernise and expand its activities and with a view to augment its long-term capital requirements, raised funds to the extent of Rs. 406.65 lakhs during the relevant accounting year by issue of debentures on rights basis to the existing shareholders. The expenditure incurred by the assessee in this regard aggregated to Rs. 22,09,889. The assessee claimed deduction of t....

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....ere not intended to supersede any other provision in the income-tax law under which the expenditure is allowable as deduction against profits. The circular went on to state that the expenditure incurred on the issue of debentures was admissible as deduction by virtue of the decision of the Supreme Court in India Cements Ltd.'s case [1966] 60 ITR 52 (SC) and that section 35D did not have the effect....

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.... the decisions of the apex court including that in Indian Oil Corporation's case [2004] 267 ITR 272. Ms. Bansal was, therefore, candid enough to concede that the circulars issued by the Board could not be departed from by the authorities. What she argued was that the circular notwithstanding, section 35D covered cases of expenditure incurred on expansion of the existing business like the responden....

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.... logic underlying the said decision to cases where the expenditure is incurred by the assessee by issue of debentures as is the position in the instant case. If that be so, it is difficult to see how the Revenue can still argue that since the case in hand refers to issue of debentures for expansion of an existing business, the expenditure incurred on the same must be amortised. Since the circular ....