The Tax Publishers2020 TaxPub(DT) 4799 (Mum-Trib)

INCOME TAX ACT, 1961

Section 37(1)

Where loan obtained was not an asset or advantage of an enduring nature; that the expenditure was made for securing the use of money for a certain period and that it was irrelevant to consider the object with which the loan was obtained, consequently, stamp duty and mortgage charges paid for obtaining such loan was not in the nature of capital expenditure and was laid out or expended wholly and exclusively for the purpose of assessee's business. Accordingly, the same would be allowable under section 37(1).

Capital or revenue expenditure - Stamp duty and mortgage charges paid for obtaining loan - Loan obtained for acquiring capital asset -

AO made disallowance of expenditure incurred on stamp duty and mortgage charges for obtaining loan. He was of the view that the said expenditure was capital in nature as the loan was obtained for acquiring capital asset. CIT(A) confirmed such disallowance. Held: Since loan obtained was not an asset or advantage of an enduring nature; the expenditure was made for securing the use of money for a certain period and that it was irrelevant to consider the object with which the loan was obtained, consequently, stamp duty and mortgage charges paid for obtaining such loan was not in the nature of capital expenditure and was laid out or expended wholly and exclusively for the purpose of assessee's business. Accordingly, the same would be allowable under section 37(1).

Followed:India Cements Ltd. v. CIT (1966) 60 ITR 52 (SC) : 1966 TaxPub(DT) 278 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11



IN THE ITAT, MUMBAI BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com