9911796707
TMI Blog1982 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ile 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 in its authorised capital from rupees two crores to rupees five 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 Cement Limited vs. CIT (1966) 60 ITR 52 (SC). The assessee appealed to the CIT (Appeals), and contented that its claim should have been accepted. The CIT (Appeals) did not agree. Relying on the decisions in the case of Upper Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein it has been held that the fee paid to the Registrar of Companies for raising capital is an allowable revenue expenditure. 5. Shri S.S. Medh, the ld. Rep. for the Department, on the other hand, supported the disallowance, He relied on the decision in the case of Upper Doab Sugar Mills Limited, 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 Breweries, where it has been held that the expenditure incurred for raising the authorised capital of a company is capital expenditure and so is not allowable. Further, he referred to the decision in the case of Bharat Carbon and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable as deduction unless it is of 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 cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B.N. Pardiwalla stated before us that the nature of the expenses under consideration remained the same as before. He pointed out that the Tribunal in their order dt. 31st Aug, 1981 in ITA No. 1117/ Bom/1980 in the case of this very assessee for the asst. yr. 1973-74 have allowed these expenses, as admissible. Further, he pointed out that that Tribunal by their order dt. 2nd Jan., 1982 have allowed similar expenses as admissible in ITA Nos. 1118 and 2972/Bom/1980 for the asst. yrs. 1974-75 and 1975-76. Shri S.S. Medh, on the other hand supported the disallowance, and relied on the arguments given by the CIT (Appeal) in his order, We have considered the contentions of both the parties as well as the facts on record. We have gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this disallowance and reject this ground. 9. The last ground in this appeal states that deductions u/ss 80G, 80M and 80VV should have been allowed. Shri B.N. Pardiwalla urged before us that the reliefs under these sections in Chapter VI have not been allowed because there was no gross total income. However, he wanted to keep the claim of the assessee for these reliefs alive in case the gross total income becomes a positive figure, as a result of some future order. We have heard Shri S.S. Medh, who supported the disallowance. In our opinion, the ground has to be rejected because no relief under Chapter VI is admissible when there is no positive total income, as is admitted before us. We, therefore, reject this ground. 10. We now come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns Industries Limited. In that case the Tribunal had held that the expenditure incurred on the repairs and maintenance of the company leased flats occupied by the directors of the company could not be treated as a perquisite u/s 40(c) of the IT Act, 1961. Following the same, he directed the ITO to recompute the amount disallowable u/s 40(c) in the light of the aforesaid decision. Shri S..S Medh urged before us that the CIT (Appeals) erred in his decision while Shri B.N. Pardiwalla supported the decision of the CIT (Appeals). We have considered the contentions of both the parties as well as the facts on record. We have gone through the decisions of the Tribunal on which the CIT (Appeals) has relied. We are in respectful agreement with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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