Public issue expenditure is deductible only for the specific statutory items covered by the allowance provision.

Public issue expenditure incurred to raise capital for business expansion is allowable only to the extent it falls within the specified items in section 350(2)(c)(iv), namely underwriting commission, brokerage, and charges for drafting, typing, printing, and advertisement of the prospectus. The allowance does not extend to the entire capital issue cost merely because the expenditure relates to a public issue. A proper break-up of the expenditure is therefore necessary to identify the eligible component. Deduction is available only for the identifiable portion matching the statutory items.

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Issues: Whether expenditure incurred on a public issue for raising capital for expansion of business was deductible under section 350(2)(c)(iv) of the Income-tax Act, 1961, and whether the benefit was confined only to the items specifically covered by that provision.

Analysis: The expenditure was incurred in connection with a public issue for raising capital. Even if the expenditure was capital in nature, the statutory allowance under section 350(2)(c)(iv) extended to underwriting commission, brokerage, and charges for drafting, typing, printing, and advertisement of the prospectus. The allowance therefore depended on whether the expenditure, or part of it, fell within those specified items. A break-up of the total expenditure was necessary to identify the eligible component.

Conclusion: The assessee was entitled to the benefit of section 350(2)(c)(iv) to the extent the expenditure was incurred on the specified items, and the issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The reference was answered by allowing deduction only for the portion of public issue expenditure that matched the statutory items specified for such allowance.

Ratio Decidendi: Where public issue expenditure includes components specifically enumerated in the allowance provision, deduction is available only to that extent and must be determined by reference to the identifiable break-up of expenditure.

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