TaxTMI 
TaxTMI 
1991 (4) TMI 39
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....hat the assessee is not entitled to deduction in respect of the sum of Rs. 3,05,981 being expenditure incurred on the issue of prospectus, etc., for raising working capital by way of replenishment ?" The assessee-company carries on business in the manufacture of textile and engineering goods. Up to August 15, 1965, it was being managed by the managing agents, Messrs. Bhogilal Menghraj and Co. Ltd. The interest in the managing agency firm was held by two groups known as Shri Bhogilal Laherchand group and Shri Lalchand Menghraj group. There developed a rift between the two groups in the year 1965 when the Government of India announced the policy of gradual abolition of the managing agency system. Shri Pratap Bhogilal was appointed managing....
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....e Income-tax Officer who relied on the Supreme Court decision in India Cements Ltd v. CIT [1966] 60 ITR 52. The Appellate Assistant Commissioner agreed with the Income-tax Officer. The Tribunal, inter alia, referred to the Bombay High Court decision in the case of Tata Iron and Steel Co. Ltd., In re [1921] 1 ITC 125, and the Supreme Court decision in India Cements Ltd. v. CIT [1966] 60 ITR 52 and agreed with the departmental authorities that the expenditure was incurred on the floating of capital by additional issue and was, therefore, capital in nature. Shri Mistry, learned counsel for the assessee, submitted that, by raising the additional capital, the assessee was not in any way benefited. The additional capital raised was Rs. 62,75,0....
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....sing of capital by additional issue of shares was held to be a revenue expenditure. This case, according to him, was squarely applicable in the facts of this case and, therefore, it must be held that the expenditure incurred herein is also a revenue expenditure. Dr. Balasubramanian, learned counsel for the Revenue, on the other hand, strongly relied upon the Tribunal's order. In particular, he stated that the Supreme Court decision in the case of Bombay Steam Navigation Co. (1953) Pvt. Ltd. v. CIT [1965] 56 ITR 52, was applicable and was against the assessee and that our court's judgment in CIT v. Glaxo Laboratories (India) Ltd. [1990] 181 ITR 59 was distinguishable. We have carefully considered the Supreme Court decision in India Cem....
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....tends to issue to the public 62,750 equity shares for the following purposes : (a) The company desires to have its shares listed on the Bombay Stock Exchange and, accordingly, the issue covered by this prospectus is offered to the public. (b) The company requires additional finance for investment in the Reishaure Chucks Project at Udhna in the State of Gujarat referred to above. (c) The company has, pursuant to an order and decree dated September 4, 1968, passed by the Hon'ble High Court of judicature at Bombay in Company Petition No. 102 of 1967 (Lalchand Menghraj v. Shree Ram Mills Ltd.), purchased 30,975 equity shares of the face value of Rs. 100 each of the company at a price of Rs. 206.50 per share and consequential reduction ....
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....in our court's judgment in CIT v. Glaxo Laboratories (India) Ltd. [1990] 181 ITR 59 were that the assessee manufactured pharmaceutical products and had, for the purpose, entered into an agreement of technical collaboration with its parent company in the U. K. which was due to expire in the beginning of 1967. The assessee applied to the Government of India for permission to enter into a fresh collaboration agreement so that it could continue to obtain the benefit of research being carried out by the parent company and also day-to-day advice in respect of the manufacture of existing and new products. The Government, however, informed the assessee that it would grant permission to enter into a fresh technical collaboration agreement only if th....