Aborted share issue expenditure remains revenue in nature where no asset or enduring benefit arises.

Expenditure on an aborted public share issue remains allowable as revenue expenditure under Section 37 of the Income-tax Act, 1961 where the issue is abandoned for reasons beyond the assessee's control and no new asset or enduring benefit arises. The intended use of the funds to support business expansion does not, by itself, alter the revenue character of the . The settled principle applied is that abortive issue expenses do not become capital merely because they were incurred in connection with proposed share capital mobilisation.

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Issues: Whether expenditure incurred on an aborted share issue is allowable as revenue expenditure under Section 37 of the Income-tax Act, 1961.

Analysis: The expenditure was admittedly incurred, but the proposed public issue was aborted for reasons beyond the assessee's control. No new asset came into existence and no enduring benefit accrued to the assessee. The Tribunal's finding was consistent with the settled principle applied by the Court that such aborted share issue expenditure does not lose its revenue character merely because it was intended to augment share capital for business expansion.

Conclusion: The expenditure on the aborted share issue was allowable under Section 37 of the Income-tax Act, 1961 and the appeal failed.

Ratio Decidendi: Expenditure incurred on an aborted public issue, which does not result in creation of any asset or enduring benefit, is allowable as revenue expenditure under Section 37 of the Income-tax Act, 1961.

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