Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Income Tax Act 1961: s.36(i)(iii) |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Income Tax Act, 1961: s.36(i)(iii) - Deduction— Interest paid upfront to the debenture holder whether allowable in the first year itself or to be spread over a period of five years being the life of the debentures — In the instant case, in the debenture issue, two options as regards the payment of interest were given to the debenture holders — Payment of interest every half yearly @ 18% .p.a. over a period of 5 years or else, one time upfront payment of = 55 per debenture — Assessee having followed the mercantile system of accounting showed the upfront payment of interest on debentures as deferred revenue expenditure in the accounts to be written off over a period of 5 years — Notwithstanding this accounting treatment, it claimed the entire upfront interest payment as fully deductible expenditure — Held: Assessee’s claim is valid —- The money raised on account of issuance of the debentures is the capital borrowed and the debentures are issued for the purpose of the business of the assessee — In such a scenario, when the interest is actually incurred by the assessee, the assessee would be entitled to deduction of full amount in the assessment year in which it is paid. |
Judge | Hon'ble Mr. Justice Arjan Kumar Sikri |
Neutral Citation | 2015 INSC 243 |
Petitioner | Taparia Tools Limited |
Respondent | Joint Commissioner Of Income Tax Special Range-1, Nasik |
SCR | [2015] 3 S.C.R. 746 |
Judgement Date | 2015-03-23 |
Case Number | 6366-6368 |
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