Short Overview: Premium payable on redemption of debentures was an expenditure allowable as revenue but it had to be spread over the period of debentures for the purposes of allowing it as deduction.

Assessee claimed loss on account of issuance of debentures at premium in the year of maturity on the ground that it was a liability which would happen only on maturity of debentures.

It is held that liability incurred by assessee to discharge debentures at premium was certain in the year of issuance and was already undertaken quantum of which was also certain and known. By virtue of this, extent of loss suffered had to be applied in respect of each year covered by debentures, to an appropriate extent.

Decision: Against the assessee.