9911796707
TMI Blog1996 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of right shares to existing shareholders was capital in nature and not admissible as a deduction in computing the total income ?" The assessee is a public limited company engaged in the manufacturing and sale of electronic instruments, relays, fusegears, etc. During the relevant previous year for the assessment year 1967-68, the assessee issued equity shares to existing shareholders as rights shares. In connection with that the assessee spent Rs. 28,000 as fees paid to the share registrars and a further amount of Rs. 10,387 was paid to solicitors, Jardine Henderson Ltd., in connection with the raising of further capital for the company. The assessee claimed before the Income-tax Officer that such expenditure was only administrative ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his contention that the expenditure claimed is capital in nature, relied upon several decisions mentioned in page 673 under the caption "expenditure incurred in increasing the share capital, raising loans or issuing debentures" in the text book "The Law and Practice of Income Tax" by Kanga and Palkhivala (Eighth edition, Vol. I) and the decision reported in CIT v. Motor Industries Co. Ltd. [1988] 173 ITR 374 (Kar). We have heard learned counsel for the assessee as well as for the Department. In CIT v. Kisenchand Chellaram (India) P. Ltd. [1981] 130 ITR 385, this court while considering whether the assessee's claim for fees paid for raising capital of the company to the Registrar of Companies is revenue expenditure, held that the amount wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37-1139 of 1982, dated January 12, 1996), held that the fees paid to the Registrar of Companies for registration could be treated as revenue expenditure. However, learned standing counsel for the Department, relying upon the decision reported in CIT v. Motor Industries Co. Ltd. [1988] 173 ITR 374 (Kar) and other decisions as seen from the commentary by Kanga and Palkhivala (Eighth edition, Vol. 1) mentioned above, submitted that the expenditure claimed by the assessee cannot be allowed as revenue expenditure. In view of the stand taken by this court in the earlier decisions and also for the reasons stated by the Andhra Pradesh High Court in the case of Warner Hindustan Ltd. v. CIT [1988] 171 ITR 224, we hold that the assessee is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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