Hon'ble S.C. Nigam, J.
Heard Sri A.K. Mahajan, learned Standing Counsel.
The present appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the "Act") relates to assessment year 2000-01. The assessee company is a private limited company incorporated under the Indian Companies Act engaged in finance and investment business. The assessee issued 21800 Optionally Convertible Premium Notes (OCPN) at Rs.100/- each on 15.4.1995 and raised loan of Rs.21.80 lakhs. These OCPNs were redeemable at the expiry of four years at Rs.200/- per OCPN. However, OCPN holders had an option at the end of the 4th year from the date of allotment to get redemption amount of Rs.200/- per OCPN or to convert into 20 equity shares of Rs.10/- each at par. The assessee has claimed a sum of Rs.4,47,958/- as OCPN, premium amount written off in the P/L Account on the grounds that the amount is nothing but the cost or compensation of using the borrowed money for four years and is accordingly in the nature of interest and allowable. Such claim has been disallowed for the assessment year 1996-97. In appeal the claim has been allowed by the CIT (A) and the order of the CIT (A) has been confirmed by the Tribunal. Like wise in the assessment year 1999-2000, the assessee claimed proportionate amount of premium payable on OCPNs at Rs.9,70,375/- and a sum of Rs.4,47,958/- in assessment year 2000-01. The CIT (Appeal) has allowed the claim in an appeal and in an appeal filed by the revenue Tribunal has confirmed the order of CIT (Appeal) and observed as follows:
"During the course of hearing, the ld. D.R. Conceded that the above issue is covered in favour of the assessee, as the Tribunal in I.T.A. No. 613/Alld/99 for assessment year 1996-97 in the appeal filed by the department vide its order dated 11.5.2005 has confirmed the action of the ld. C.I.T. (A) that the total amount so payable by the assessee on the redemption of OCPNs is to be spread over the entire period of OCPNs i.e. four years as per decision of the Apex Court in the case of Madras Industrial Investment Corpn. Ltd. Vs. C.I.T., 225 I.T.R. 802 and also the decision of the Hon'ble Calcutta High Court in the case of Universal Cables Ltd. vs. C.I.T., 243 I.T.R.371. A copy of the said order of the Tribunal dated 11.5.2005 is placed on record.
We have considered the orders of the authorities below and the order of the Tribunal dated 11.5.2005 (supra). We observe that the 2 facts and the issue in both the appeals are identical to assessment year 1996-97 (supra). Respectfully following the earlier order of the Tribunal, we uphold both the orders of the ld. C.I.T. (A) for both the assessment years under consideration by rejecting the grounds of appeal taken by the department."
Learned Standing Counsel is not able to show that the revenue has filed any appeal against the order of the Tribunal for the assessment year 1996-97.
The Division Bench of the Calcutta High Court in the case of Universal Cables Ltd. v. Commissioner of Income Tax, reported in 243 ITR-371 following the decision of the Apex Court in the case of Madras Industrial Investment Corporation Ltd. Vs. Commissioner of Income Tax, reported in 225 I.T.R.-802 has held that there was a continuing benefit to the business of the company over the entire period and therefore premium payable on redemption of loan convertible secured debentures issued during the year should be spread over the period of the debentures and such premium payable liable to be deducted.
In view of the above, we are of the view that no substantial question of law is involved which requires consideration by this Court. The appeal stands dismissed.
7.01.2010 OP