S.H.KAPADIA, J. - (1.) THE above six appeals have come before this court under section 260A of the Income Tax Act. Income Tax Appeal Nos. 88 of 2001, 89 of 2001 and 90 of 2001 are filed by the assessee whereas, Income Tax Appeal Nos. 155 of 2001, 180 of 2001 and 181 of 2001 are filed by the department. For the sake f convenience and brevity, the facts in Income Tax Appeal No. 89 of 2001 are hereinafter mentioned. Facts
(2.) DURING the assessment year 1996 -97, the assessee issued non -convertible debentures aggregating to Rs. 6,00,00,000 on a private placement basis. The face value of the debenture was Rs. 100 each. As regards payment of interest on debentures, the debenture -holders were at their option either periodically receiving interest on half -yearly basis at 18 per cent per annum for five years or one year up -front payment of Rs. 55 per debenture. The option in respect of payment of interest was to be exercised within 30 days of the date of allotment. Under the terms of the issue, the debentures could be redeemed at par along with 10 per cent redemption premium at any time after the end of the fifth year but not beyond the seventh year. The debentures were allotted to the following parties on the dates indicated hereinbelow : 1. Maliram Makharia Stock Brokers Pvt. Ltd. 495.00 29 -3 -1996 2. Orient Corporation 1.25 19 -6 -1996 3. Shree Suyog Agencies 1.25 19 -6 -1996 4. Shree Kyamsap Enterprises 1.25 19 -6 -1996 5. Shree Suraj Agencies 1.25 19 -6 -1996 6. Sharp Knife Co. Pvt. Ltd. 100.00 19 -6 -1996 600.00
(3.) THE debentures at serial No. 1 in the above statement was allotted in the accounting year ending 31 -3 -1996 whereas, the debentures at serial nos. 2 to 6 were allotted in the accounting year 1996 -97. The parties (lenders) at serial no. 1 and serial no. 6 were Maliram Makharia Stock Brokers Private Limited and Sharp Knife Company Private Limited. These lenders opted for one time up -front payment of Rs. 55 per debenture of face value Rs. 100 payable on allotment. They opted for Deferred Interest Option (i.e., D.I.O.).;