TaxTMI 
TaxTMI 
2009 (12) TMI 49
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.... following substantial questions of law: "i. Whether in the facts and circumstances of the case, the Tribunal was right in holding that depreciation should be allowed on standby spare parts even though they were not taken for use during the year? ii. Whether in the facts and circumstances of the case, the Tribunal was right in holding that investment allowance should be allowed on standby spare parts even though they were not taken for use during the year? iii. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the expenses related to obtaining fixed deposits from the public is a revenue expenditure liable for deduction ? And iv. Whether in the facts and circumstances of the case, the Trib....
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....and second questions, a Division Bench of this Court in the case of CIT, Chennai Vs. Southern Petrochemical Industries Corporation Limited in TC(A)Nos.74 and 75 of 2003 by judgment dated 29.1.2007 considered the issue and decided in favour of the assessee. Learned counsel for the Revenue submits that the issue is covering the questions of law raised in this case. The third question of law formulated in this case is also covered and decided in the very same decision in favour of the assessee by observing as follows: "For deciding the issue that the expenses relating to obtaining fixed deposits are closely linked with the business requirement of the assessee, it is apposite to have a cursory look on the decided case laws on this point. In ....
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....and exclusively for the purpose of the assessee's business and was therefore allowable as a deduction. The Apex Court also held that obtaining capital by issue of shares is different from obtaining loan by debentures. The Bombay High Court in CIT Vs. Mahindra Ugine and Steel Co. Ltd. (250 ITR 696) considered the allowability of stamp duty paid on debenture issue as business expenditure and held that the expenditure is revenue in nature. In that case, attack was made by the Revenue on the strength of Section 35D of the Act which deals with amortisation of certain preliminary expenses and the Bombay High Court held that 'Section 35D deals with amortisation of certain preliminary expenses. Under Section 35D(1)(ii), it is laid down that a....
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....and therefore, the provisions of Section 37(3A) read with Section 37(3B) were not applicable to the said expenditure.' Considering the ratio laid down in the above said decisions, we are of the view that when the Tribunal has recorded a finding that the expenses relating to obtaining fixed deposits are closely linked with the business requirement of the assessee, such expenses are allowable expenses. We therefore hold that the Tribunal was right in holding that the expenses for obtaining fixed deposits from the public is revenue in nature. Accordingly, we answer the second question in the affirmative and against the Revenue." 6. In respect of the fourth question, it could be seen that the amendment has been incorporated in the provisi....