2015 (5) TMI 227

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..... DER The Court : The subject matter of challenge in this appeal is a judgement and order dated 28th January, 2005 passed by the learned Income Tax Appellate Tribunal pertaining to the assessment year 1996-97. Briefly stated the facts and circumstances of the case are as follows. The assessee claims to have incurred an expenditure of a sum of Rs. 87,20,000/- on account of share issue expenses duri .....

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..... it can be amortised U/s.35D. Appellant has claimed I/10th of such expenditure. Therefore, he is entitled to such deduction U/s.35D. The case of Brooke Bond India is not applicable to that of the appellant. A.O. is not justified in treating Rs. 8.72 lacs as capital expenditure. The addition in this regard is deleted." The CIT (Appeal) in its aforesaid order dated 29th May, 1998, however, missed o .....

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..... the rate of 1/10th of the expenses for 10 successive assessment years. However, the total amount of deduction allowable shall be restricted to 2.5% of the capital employed. In the present case, the A.O. has held that because of this restriction of 2.5% prescribed in the section itself, qualifying amount for deduction in the year under appeal comes to Rs. 2.51 lakhs in place of Rs. 8.72 lakhs claim .....

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..... 5D is subject to the provisions contained in Sub-section 3 of Section 35D. The provision contained in Sub-section 3 provide an outer limit. Therefore, there can be no dispute nor has Mr. Khaitan, learned Senior Advocate disputed that deduction under Section 35D cannot be in excess of the provision contained in Sub-section 3 which is 2.5% of the total capital employed. The contention raised by Mr. .....

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..... he jurisdiction of the CIT (A) in its order dated 29th May, 1998 extended merely to the assessment year 1995-96. The assessment year 1996-97 is a separate unit and that assessment cannot be made otherwise than in accordance with law. Therefore, the submission is without any merit and is rejected. The question is answered in the affirmative and in favour of the revenue. The appeal is dismissed.

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