Section 37(1), read with section 263 - Allowability of issue of Foreign Currency Convertible Bonds

The High Court of Bombay has held that where Assessing Officer allowed assessee's claim for deduction of expenses incurred on issue of Foreign currency Convertible Bonds (FCCBs), in view of fact that unless option was exercised by bondholders, conversion of those bonds into equity shares was not permissible, impugned revisional order passed by Commissioner disallowing expenditure in question on ground that FCCBs in real sense, were equity shares right from beginning and that conversion of bonds was only a routine technical compliance as per regulations and guidelines, was not sustainable