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TMI Blog2012 (10) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds in this appeal: 1. The learned Assessing Officer erred in computing the assessment at a total income of Rs. 3,93,355/- as against Loss of Rs. 46,69,139/- returned by the appellant. 2. The learned Assessing Officer erred in disallowing Rs. 49,99,000/- under section 35D of the Income Tax Act, 1961. 3. The learned Assessing Officer also erred in disallowing Rs. 63,494/- under section 14A-of the Income Tax Act, 1961. 4. The learned Assessing Officer erred in initiating penalty under Section 27 1(1) (c) of the Income Tax Act, 1961. 5.On the facts and in the circumstances of the case and in law, the Assessing Officer erred in levying interest u/s. 234B and 234C of the Act. 6. The Order passed by the learned Assessing Officer is illegal, bad in law, ultr virus and contrary-to the provisions of the law and facts and is passed without application of mind and in violation of the principles of natural justice. 7. Each one of the above grounds of appeal is independent and without prejudice to each other. . 8. The Appellant craves leave to add, to alter or to amend any of the ground of appeal mentioned hereinabove. 3 Ground number 1, 6 to 8 are general in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fee to registrar for raising capital of the assessee company. He has relied upon the decision of honourable Rajasthan High Court in case of Commissioner of Income-tax v. Multi Metals Ltd. reported in 188 ITR 151 and submitted that the honourable High Court has decided that the expenditure for the purpose of increase in authorised share capital is deductible under section 35D (2) (c) (iv) of the I T Act. The learned AR has referred the decision of honourable Rajasthan High Court and submitted that the honourable High Court has observed that the language of sub section 2 ( c) (iv) of section 35D is wide in nature and would include the deductibility of fee paid by the assessee to registrar for enhancement of capital. It is settled principle that the provisions of law capable of two interpretations should be interpreted in manner so as to give the benefit to the assessee. The ld AR of the assessee has then referred schedule X of Companies Act and submitted that the Companies Act requires the fee to be paid even by a existing company to the ROC and therefore, the fee paid to the ROC for increase in authorised capital falls under section 35D (2)(iii). 5.4 On the other hand, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) wherein it was held that expenses incurred on increasing the share capital and fees paid to Registrar of companies for increase in authorised capital is capital expenditure and cannot be allowed as revenue expenditure. In the case of CIT Vs. Hindustan Insecticides Ltd 250 ITR 338, the Hon1e Delhi High Court has held that fees paid for increase in share capital is not fees for registration of the/ company and hence is not amortizable under Section 35D(2)(e)(iii) of the I..T. Act. Regarding the contention of the assessee that this item is covered by provisions of section 35D (2)(d) of the I.T. Act, it is seen that the said clause provides that any other item as may be prescribed can be considered for amortization. However, nothing has been prescribed, so as to include the expenses as claimed by the assessee. Therefore the claim of the assessee is rejected. The assessee ha relied on the case of CIT Vs. Multi Metals Ltd 188 ITR 151. The facts of that case are totally different. In that case, the expenses were incurred for raising public issue of shares and therefore was held to be covered by Section 35D (2)(c)(iv). The assessee is not a public company and has not incurred any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed fees payable for registration of a company whose nominal share capital does not exceed Rs. 20,000. Item 2 of the Schedule indicates an additional fee for registration of a company whose nominal share capital exceeds Rs. 20,000. The Tribunal was of the view that item 3 was the relevant item. The said item reads as follows : (3) For filing a notice of any increase in the nominal share capital of a company the difference between the fees payable on the date of filing the notice for the registration of a company with a nominal share capital equal to the increased share capital and the fees payable, on such date, for the registration of a company with a share capital equal to the nominal share capital of the company filing the notice immediately before the increase. With reference to the said item, the Tribunal held that the additional fee is a registration fee on the difference in the nominal share capital and the increased share capital of the company and is covered by the said item. For coming to said conclusion the Tribunal observed that it has to be kept in view that the whole amount, which becomes the authorised share capital, would have attracted payment of fee at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) has no application to the facts of the case. The question referred at the instance of the Revenue is, therefore, answered in the negative, in favour of the Revenue and against the assessee. 7 It is clear from the decisions cited above that the issue is settled and covered against the assessee and in favour of the revenue. Accordingly, respectfully following the decisions of honourable Supreme Court as well as honourable Delhi High Court, we do not find any merit in the appeal of the assessee on this issue and hence we uphold the orders of the authorities below on this issue. 8 Ground number 4 is regarding initiation of penalty under section 271 (1 ((C) of the I T Act. 9 We have heard the learned not A.R as well as the learned DR and considered the relevant records. As it appears from the ground itself that this ground is premature and raised before any penalty is levied under section 270(1)( c ). Hence we dismiss ground number 4 as premature. 10 Ground number 5 regarding levy of interest under section 234B and 234C of the I T Act. 11 Levy of interest under section 234B and 234C are mandatory and consequential in nature; accordingly, the same is dismissed. 12 In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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