TaxTMI 
TaxTMI 
2021 (5) TMI 216
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....ssessed income of the assessee at Rs. 2,45,50,920/- by making the following expenses: 1. ROC expenses of Rs. 13,00,000/- 2. Expenses towards acquisition of subsidiary companies of Rs. 66,17,681/- 3. Carry forward loss of Rs. 16,43,939/- 3. When the assessee preferred an appeal before the CIT(A) against the order of AO, the CIT(A) partly allowed the appeal of the assessee. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before the ITAT raising 16 grounds of appeal. Ground No. 1 & 16 are general in nature, hence, need no adjudication. Ground Nos. 2 to 6 are regarding addition of Rs. 13,00,000/- towards ROC expenses. Ground Nos. 7 to 14 are regarding addition of Rs. 66,17,681 towards expenses for acquisition of subsidiary companies. Ground No. 15 is relating to the addition of Rs. 16,43,939/- towards carry forward loss. 5. As regards ground Nos. 2 to 6 regarding the addition of Rs. 13,00,000/-, during the course of assessment proceedings, the AO noticed that the assessee had paid ROC fees of Rs. 13,00,000/- and asked the assessee to furnish details in this regard. Assessee stated that the fees paid to ROC for increase in authorize....
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....ssing authority relying on the judgment of the Apex Court in the case of Punjab Industrial Development Corpn. Ltd. v. CIT [1997] 225 ITR 792/93 Taxman 5 where it was held that the payment made to the Registrar of Companies is to be treated as a capital expenditure. 5. There is no quarrel with the said legal position. In the instant case deduction was not claimed on the ground that it is a revenue expenditure. The deduction was claimed on the ground that Section 350 provides for amortization of preliminary expenses in respect of fees paid to the Registrar of Companies and expenditure incurred towards public subscription of shares. Once the condition of Section 350 is fulfilled, the assessee is entitled to the deduction. That is precisely what, the Tribunal has held. We do not see any error in the finding of the Tribunal. 6. For the aforesaid reason, the second substantial question of law framed is also answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed. " * Commissioner of Income tax Vs. Nuchem Ltd in [2015] 59 taxmann.com 455 (Para 8, Page 8) "8 In Multi Metals Ltd. (supra) and Goa Carbon Ltd. I S cas....
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....dition made by the AO." 5.3 The ld. DR, on the other hand, relied on the orders of authorities below. In support of Revenue, he relied on the judgment of Apex Court in the case of Brooke Bond India Ltd., [1997] 12 SCL 83 (SC, a copy of which is placed on record. 5.4 After hearing both the parties and perusing the material on record as well as the orders of revenue authorities, it is observed that the revenue authorities have disallowed the claim of the assessee in respect of ROC expenses towards increase of share capital by treating it as capital in nature by following the decision of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. Vs. CIT (supra) and the ld. DR has also relied on the decision of the Hon'ble Apex court in the case of Brooke Bond India Ltd., (supra). The authorities below has disallowed the assessee's claim of expenses u/s 37 of the Act. We approve the decision of the revenue authorities as the ROC expenses towards increasing the share capital is a capital in nature. However, section 35D has been inserted by the Finance Act, 1970, with effect from 01/04/1971, which reads as under: "(3) Where the aggregate ....
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....e new industrial unit of the company; (c) " long- term borrowings" means- (i) any moneys borrowed by the company from Government or the Industrial Finance Corporation of India or the Industrial Credit and' Investment Corporation of India or any other financial institution which is for the time being approved by the Central Government for the purposes of clause (viii) of subsection (1) of section 36 or any banking institution (not being a financial institution referred to above), or (ii) any moneys borrowed or debt incurred by it in, a foreign country in respect of the purchase outside India of capital plant and machinery, where the terms under which such moneys are borrowed or the debt is incurred provide for the repayment thereof during a period of not less than seven years." On perusal of the financial statements submitted by the assessee, we find that there is no doubt that the assessee has increased share capital. On perusal of the provisions of section 35D, we find substance in the written synopsis submitted by the ld. AR of the assessee relying on the judgements quoted supra that section 35D provides amortization of certain expenses, which ar....