Recently, in CIT v. M/s. Aditya Birla Nuvo Ltd, the division bench of the Bombay High Court dismissed an appeal preferred by the Revenue by holding that expenditures incurred on Buy-back of shares, acquisition of marketing and technical knowhow and the premium paid on redemption of debentures are Revenue expenditures etc. are revenue in nature and therefore, not taxable under the provisions of the Income Tax Act.
On the issue of expenses incurred on buy back of shares, the bench noted that the issue is settled by the decision in CIT v/s. M/s. Hindalco Industries Ltd and held that the same must be treated as revenue expenditure.
The bench further rejected the contention of the Revenue that the expenses incurred on acquisition of marketing and technical knowhow, must be categorized as capital in nature.It was said that the issue is squarely covered by the Apex Court decision in Kedarnath Jute Mfg. Co. Ltd and is decided in favour of the assessee.
With regard to the allowability of premium paid on pre redemption of debentures, the bench found that the Tribunal held the same as revenue expenditure by relying upon its Coordinate Bench in CIT v/s. M/s. Grindwell Norton Ltd, which was subsequently confirmed by the High Court. Therefore, in the opinion of the bench, “no substantial question arises on the above issue”. Resultantly, the appeal of the Revenue was dismissed.
Read the full text of the order below.
