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Issues:
1. Disallowance of expenditure for additional shares as capital expenditure. Analysis: The appeal pertains to the assessment year 1986-87 and challenges the disallowance of Rs. 11,310 as capital expenditure incurred for filing fees for additional shares. The Assessing Officer initially disallowed the claim, considering it non-admissible as business expenditure. The Commissioner of Income-tax (Appeals) deemed the expenditure as capital but allowed amortization under section 35D(2)(c)(iv) of the Act, directing 1/10th deduction for the year. The appellant contested, citing conflicting judicial opinions on the matter. Various High Courts differed on whether such expenses constitute revenue or capital expenditure. The appellant argued that the increase in share capital aimed to reduce interest liability and promote business, hence qualifying as business expenditure. The appellant contended that the expenditure on filing fees was for business promotion, emphasizing no enduring benefit or capital asset acquisition resulted. The Departmental Representative relied on a Delhi High Court decision and argued that since it was a jurisdictional High Court ruling, the Income-tax authorities' decision was correct. The Tribunal reviewed precedents where High Courts held such expenses as revenue or capital expenditure, with a majority considering them non-deductible. The Delhi High Court's decision in a similar case also deemed such expenses as capital in nature, allowing deduction over ten years under section 35D. The Tribunal concluded that the matter aligned with the Delhi High Court's decision, thus ruling against the appellant. While the appellant argued against the applicability of section 35D, the Tribunal clarified that the Revenue did not appeal, so the deduction allowed by the Commissioner of Income-tax (Appeals) could not be reconsidered. Ultimately, the Tribunal upheld the Income-tax authorities' decision, determining the expenditure of Rs. 11,310 as non-business expenditure. The judgment emphasizes the distinction between revenue and capital expenditure in the context of expenses related to the issue of additional equity shares, highlighting the importance of judicial precedents in such matters.
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