Tribunal grants Assessee's appeal, allowing capitalization of share issue expenses

The Tribunal allowed the Assessee's appeal for the assessment year 1986-87, permitting the capitalization of a significant portion of share issue expenses connected to the acquisition of assets for depreciation and investment allowance. The Assessee's claim for deduction related to enhanced liability under the Drug Price Control Order was upheld based on previous final decisions. Expenditures on Insurance Premium for a Health Insurance Scheme and club membership fees were excluded from disallowance computation, following precedent decisions. The appeal was dismissed with no costs awarded.

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Issues:
1. Share issue expenses related to acquisition of assets.
2. Deduction for enhanced liability under the Drug Price Control Order.
3. Exclusion of certain expenditures for computing disallowance under sections 40A(5) and 40(c).

Share Issue Expenses Related to Acquisition of Assets:
The appeal concerned an assessment year of 1986-87, originating from a decision of the Income Tax Appellate Tribunal. The Revenue raised a question regarding the justification of attributing share issue expenses to the acquisition of assets like Plant and Machinery, making them eligible for depreciation and investment allowance. The Tribunal noted a similar decision in favor of the Assessee for the assessment year 1984-85. The Tribunal found that a significant portion of the share issue expenses was directly connected to the acquisition of capital assets and should be capitalized, allowing for depreciation and investment allowance. The Assessee claimed that the unit became functional in the assessment year 1986-87.

Deduction for Enhanced Liability under the Drug Price Control Order:
Another issue raised was the entitlement of the Assessee to a deduction for an enhanced liability of &8377; 612.32 lacs, related to payment of interest under the Drug Price Control Order, 1979. The Revenue questioned the compliance with Section 43B in this regard. The Tribunal, however, followed its previous order for the assessment year 1984-85, which had attained finality. As the decisions for earlier assessment years had been finalized, no substantial question of law arose for the assessment year 1986-87 on this ground.

Exclusion of Certain Expenditures for Computing Disallowance:
The final issue involved the exclusion of expenditures on Insurance Premium for a Health Insurance Scheme of employees and club membership fees for computing disallowance under sections 40A(5) and 40(c). The Tribunal referred to a decision in favor of the Assessee for the assessment year 1984-85 regarding health premium. Additionally, the issue of club membership was covered by a decision of the Division Bench in favor of the Assessee. Consequently, no substantial question of law was found to arise in this context. The appeal was ultimately dismissed with no order as to costs.

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