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Issues:
1. Whether stamp duty paid on debenture issue is an allowable deduction u/s 35D of the Income-tax Act, 1961. 2. Whether liability arising from wage settlement is an allowable deduction. Stamp Duty on Debenture Issue: The Tribunal held that stamp duty paid on debenture issue is an allowable deduction u/s 35D. Section 35D allows deduction for specified expenditure incurred by an Indian company in connection with the issue of debentures for public subscription. The Court agreed with the Tribunal's decision, stating that the expression "in connection with the issue of public subscription of the debentures" is broad and includes stamp duty. The judgment in India Cements Ltd. v. CIT [1966] 60 ITR 52 was cited to support the allowance of stamp duty as a deduction under section 35D, even for capital expenditure. Therefore, the Tribunal's decision to allow the deduction was upheld. Liability from Wage Settlement: The Tribunal found that a liability of Rs. 1.81 crores arising from a wage settlement was an allowable deduction. After negotiations and conciliation proceedings, it was decided that a lump sum amount would be paid to workers for a specified period. The Tribunal concluded that the provision made by the assessee in anticipation of this liability was reasonable and correctly debited in the profit and loss account. The Court agreed with the Tribunal's finding, stating that the provision was made on a reasonable basis for anticipated expenditure, making it an allowable deduction. In conclusion, the appeal was dismissed based on the Tribunal's decisions regarding the stamp duty on debenture issue and the liability arising from the wage settlement.
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