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Issues involved: Determination of capital expenditure on filing fees for increasing authorized capital and deductibility of surtax liability in the computation of business income.
Capital Expenditure on Filing Fees: The assessee, a public limited company, sought to deduct expenditure of Rs. 22,530 incurred as filing fees for increasing authorized capital. The Income-tax Officer, Appellate Assistant Commissioner, and Tribunal all rejected this claim. The High Court noted that a previous judgment had ruled against such claims, citing Ahmedabad Manufacturing and Calico Pvt. Ltd. v. CIT [1986] 162 ITR 800. Consequently, the court held in favor of the Revenue on this issue. Deductibility of Surtax Liability: The assessee also contended that surtax liability should be deductible as revenue expenditure. However, the court referenced another judgment, S. L. M. Maneklal Industries Ltd. v. CIT [1988] 172 ITR 176, which had ruled against such deductions. Therefore, the court again ruled in favor of the Revenue on this issue. Conflict of Judicial Opinion: The court acknowledged a sharp division of judicial opinion on the first question, with different High Courts holding contrasting views. Despite this, the court decided to issue a certificate under section 261 of the Income-tax Act, 1961, for appeal to the Supreme Court specifically on the first question regarding capital expenditure on filing fees. This decision was influenced by the pending resolution of the matter before the Supreme Court and the conflicting opinions among various High Courts. Conclusion: The High Court disposed of the reference by granting the certificate for appeal to the Supreme Court solely on the first question related to capital expenditure. The court emphasized that the certificate was granted only for consideration of this specific issue and no costs were awarded in this matter.
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