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TMI Blog1982 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee to deduct a sum of Rs. 45,000 while computing its business income, should have been allowed. This sum had been spent by the assessee as fees paid to the Registrar of Companies in connection with the increase of its authorised capital from Rs. 2 crores to Rs. 5 crores. The assessee claimed before the ITO that this expense of Rs. 45,000 should have been allowed as revenue expense. The ITO did not agree and disallowed the same on the ground that it was capital expense. The ITO relied on the decision of the Supreme Court in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52. The assessee appealed to the Commissioner (Appeals), and contended that its claim should have been accepted. The Commissioner (Appeals) did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26-5-1930 of the Tribunal in IT Appeal No. 168 (Jp.) of 1979, wherein it has been held that fee paid to the Registrar of Companies for raising capital is an allowable revenue expenditure. 5. Shri S. S. Medh, the learned representative for the department, on the other hand, supported the disallowance. He relied on the decision in the case of Upper Doab, wherein it has been held that expense incurred in connection with the issue of additional equity shares is not revenue expenditure, and so is not deductible. Next, he referred to the decision in the case of Mohan Meakins, wherein it has been held that expenditure incurred for raising the authorised capital of a company is capital expenditure, and so is not allowable. Further, he referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital nature. An expenditure will be capital in nature if (i) it is incurred to obtain an enduring benefit, and (ii) the benefit so acquired was in the capital field. Applying the said test to the facts of the case before us, we find that the assessee must fail. By increasing the limit of the authorised capital the assessee acquired an enduring benefit inasmuch as it can acquire fresh capital from the general public by issuing a prospectus. The right to acquire share capital by inviting public subscription thereto is evidently an enduring advantage to the business carried on by the assessee. Secondly, it is equally evident, that the advantage was in the capital field, because it relates to the capital structure of the assessee. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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