TaxTMI 
TaxTMI 
2021 (5) TMI 216
X X X X Extracts X X X X
X X X X Extracts X X X X
....elopment in life sciences, filed its return of income for the AY 2007-08 declaring NIL income, which was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and accordingly, the AO issued statutory notices to the assessee, against which, the AR of the assessee filed required information. After going through the information, the AO completed the assessment determining the assessed 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Authorised share capital. Consequently, this amount was debited to the P & L account as allowable expenditure connected with the business activity by treating the same as revenue expenditure. In this connection, we would like to submit that the expenditure incurred for the enhancement of authorised capital is only for the purpose of bettering or improving, an established business and cannot to be for the purpose of a new business. If the same is viewed in a business sense, the enhancement of the authorised capital is only to have better conduct, efficiency and profitability of the business. At this juncture it is to bring to your notice that * The fee paid by the company to ROC is undoubtedly connected with and advantageous to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rred 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 cases (supra), it has been held by the Rajasthan and th eBombay High Courts, respectively, that any expenditure incurred by way of fees paid to the Registrar of Companies for en....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the fee paid to the Registrar of Companies for raising authorised capital of the assessee company was covered by sub section (2)(c)(iv) of section 350 of the Income-tax Act." * DCIT Vs. Mercury Projects Pvt. Ltd in ITA No. 440/Hyd/2018 (Para 16, Page 23-24) "Respectfully following the ratio laid down by the Hon'ble Rajasthan High court in the case of Multi Metals lid., (supra), as above, 'We set aside the order of CIT(A) and delete the addition made u/« 350 of Rs. 22,20,400/-. Accordingly, the grounds raised by the assessee are allowed. " In view of the above explanations and clarifications, it is humbly prayed before your good selves to delete the addition made by the AO." 5.3 The ld. DR, on the other hand, relied....
X X X X Extracts X X X X
X X X X Extracts X X X X
....b- section (1). Explanation.- In this sub- section,- (a) " cost of the project" means- (i) in a case refer- red to in clause (i) of sub- section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the business of the assessee commences; (ii) in a case referred to in clause (ii) of sub- section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich 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 sub....