2001 (2) TMI 865

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....s shares. Rival contentions have been heard and record perused. 2. The relevant facts in this case are that the assessee is a closely held company engaged in manufacturing of oil rig equipments and spares. For assessment year 1995-96, the Assessing Officer, while making the assessment under section 143(3), made a disallowance of Rs. 1,32,164 on account of expenses incurred in connection with issue of bonus shares. The assessee had issued 24,080 equity shares of Rs. 1,000 each by way of capitalising its reserves and surplus as bonus shares. For issue of bonus shares, the assessee increased its authorised share capital and for this purpose incurred an expenditure of Rs. 1,32,164. The same was disallowed by the Assessing Officer and confirmed....

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.... of allowability of expenditure on issue of bonus shares. It has distinguished the expenditure in increasing the authorised share capital and expenditure on issue of bonus shares. It has been held by the Bombay High Court that the expenditure on increase of authorised share capital was a capital expenditure but the expenditure on issue of bonus shares was revenue expenditure. It has further been pointed out by the AR that the decision of the Bombay High Court in the case of Bombay Burmah Trading Corpn. Ltd. (supra) has been affirmed by the Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. (supra). It was accordingly contended that the addition made by the Assessing Officer and confirmed by the CIT(A) may be d....