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TMI Blog2015 (4) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... still retains the character of capital expenditure, since the expenditure was directly related to the expansion of capital base of the company. Thus, there was no doubt on the issue that even when there is increase in the capital for the business of the company then also the expenditure would be capital in nature and cannot be claimed as revenue expenditure. Therefore, clear-cut law has been laid down by Hon’ble Apex Court that such expenditure cannot be claimed as revenue expenditure. Thus when prima facie, a wrong claim is made, which is not only against two decisions of Apex Court i.e. in the cases of Brooke Bond India Ltd. (supra) and Punjab State Industrial Corporation Ltd. (supra), but also against the decision of Hon’ble Delhi High Court in the case of CIT Vs. Hindustan Insecticides (2001 (2) TMI 75 - DELHI High Court) then it will be a case of claiming expenditure, which is not permissible in law and assessee’s explanation cannot be considered to be bona fide or substantiated. CIT(A) did not commit any error in sustaining the concealment penalty. - Decided against assessee. - ITA No. 4674/Del /2011 - - - Dated:- 11-2-2015 - Shrii.P. Bansal And Shri N.K. Saini JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The assessee in the present case is aggrieved with the levy of concealment penalty of ₹ 2,40,000/- which is levied on addition of ₹ 7,08,800/- claimed as expenditure incurred on filing fee - ROC which was with respect to increase in authorized share capital of the assessee company. It is the case of the assessee that such increase was only on account of working capital requirement and not on account of investment in creating assets of the company. Therefore, it is the claim of the assessee that despite the two decisions of Hon ble Supreme Court, namely, Punjab State Industrial Development Corporation Ltd. Vs. CIT, 225 ITR 792 and Brooke Bond India Ltd. Vs. CIT, 225 ITR 798 the assessee cannot be said to have concealed the particulars of income for claiming such expenditure. It is the case of the assessee that the expenditure having been incurred for the purpose of working capital requirement, the same cannot be said to be capital expenditure even applying the aforementioned decisions of Hon ble Supreme Court. For this purpose, it is the case of the assessee that the analysis of balance-sheet of the assessee for the assessment years 2006-07 to 2009-10 will reveal tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the total working capital required for the purposes of business of the Company and ₹ 147000/- was incurred towards stamp duty charges incurred towards stamping of Memorandum/articles of the Company upon alteration of said share capital of the Company. The balance of ₹ 1800/- was paid to Registrar of Companies towards filling fee of annual return, financial statements and other documents. It is clearly evident that the said expenses are related and connected to the business of the Company, and incurred for the purposes of business of the Company, therefore are fully allowed in term of provisions of Income Tax Act, 1961. 5. It is further the argument of learned AR that according to following observations in the commentary written by Sampath Iyengar s Law of Income Tax 11th Edition, such expenditure could be claimed by the assessee. Reference was made to the following: 14. Fees for enhancement of capital -Fees paid to Registrar of Companies for enhancement of capital is capital expenditure. However, the Supreme Court in Brooke Bond India Ltd v CIT while following the decision in Punjab State Industrial Development Corporation's case (supra), had indicated an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oC and he accordingly disallowed the claim of the assessee. The CIT(A), however, deleted the addition made by the Assessing Officer following the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Multi Metals Ltd. [1991] 188 ITR 151 (Raj.). Aggrieved by the order of the CIT(A) the revenue has preferred the aforesaid ground of appeal. . 18. We have heard the rival submissions. The learned Departmental Representative relied on the decision of the Hon'ble Supreme Court in the cases of Punjab State Industrial Development Corp. Ltd. v. CIT [1997] 225 ITR 792ftnl Asstt. CIT v. Fascel Ltd .. htm (SC) and Brooke Bond India Ltd. v. CIT [1997] 225 ITR .798ftn2 Asstt. CIT v : Fascel Ltd .. htm (SC). Section 35D(2) clause (c)(iv) allows 1/10th of expenditure incurred in connection with issue for public subscription of shares in or debentures of a company. The Rajasthan High Court in the case of Multi Metals Ltd (supra) had considered the fee paid to RoC as falling within the ambit of section 35D(2)(c)(iv) of the Act. The Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. (supra) and Brooke Bond India Ltd. (supra) was, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that no specific view has been formed by the Apex Court regarding allowability of such claim that if there is increase in working funds then such expenditure could be allowed. The observations which have been reproduced are from the decisions of Apex Court in the case of Brooke Bond Indian Ltd Vs. CIT (supra). However, in the case of Punjab State Industrial Development Corporation Ltd. Vs. CIT (supra), this issue has been considered and it has been observed that the fee paid to Registrar for expansion of capital base of the company was directly related to the capital expenditure incurred by company and although incidentally that would certainly help in business of company and may also help in profit making, it still retains the character of capital expenditure, since the expenditure was directly related to the expansion of capital base of the company. Thus, there was no doubt on the issue that even when there is increase in the capital for the business of the company then also the expenditure would be capital in nature and cannot be claimed as revenue expenditure. Therefore, clear-cut law has been laid down by Hon ble Apex Court that such expenditure cannot be claimed as revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is against the law laid down by Hon ble Supreme Court and Hon ble Jurisdictional High Court will amount to furnish of inaccurate particulars and concealment of income. Thus, applying the aforementioned decision in the case of CIT Vs. Reliance Petroproducts Private Ltd., no relief can be granted to the assessee. 12. In the above circumstances, the claim of the assessee was against the decision of Hon ble Delhi High Court and thus was prima facie wrong claim. When prima facie, a wrong claim is made, which is not only against two decisions of Apex Court i.e. in the cases of Brooke Bond India Ltd. (supra) and Punjab State Industrial Corporation Ltd. (supra), but also against the decision of Hon ble Delhi High Court in the case of CIT Vs. Hindustan Insecticides (supra) then it will be a case of claiming expenditure, which is not permissible in law and assessee s explanation cannot be considered to be bona fide or substantiated. 13. In view of above discussion, we are of the opinion that the learned CIT(A) did not commit any error in sustaining the concealment penalty. We decline to interfere and the appeal filed by the assessee is dismissed. 14. In the result, the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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