2022 (7) TMI 692

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..... Revenue is challenging in this appeal the action of the Ld. CIT(A) in allowing the deduction of Rs. 50,58,08,417/- as revenue expense under section 37(1) of the Income Tax Act, 1961 (for short "the Act") in the assessment year 2009-10 as against the learned Assessing Officer allowing a sum of Rs. 10,11,61,683/- under section 35D of the Act. Brief facts relating to this issue are that the assessee is a company engaged in the business of development of power project. In the return of income filed on 26/09/2009 for the assessment year 2009-10, the assessee claimed a deduction of Rs. 10,11,61,683/-under section 35D of the Act representing 1/5th of the total issue expense of Rs. 50,58,08,417/- and the same was allowed by the learned Assessing ....

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....the return of income filed on 26/09/2009 for the assessment year 2009-10, the assessee claimed deduction of Rs. 10,11,61,683/- under section 35D of the Act representing 1/5th of the total issue expenses of Rs. 50,58,08,417/- and the Ld. CIT(A), after having carefully studied the business model as explained by the assessee in its submission before him, held that the entire issue expenses of Rs. 50,58,08,417/- are allowable as deduction on revenue account under section 37(1) of the Act. Ld. AR made reference to so many decision in support of his argument that the courts are slowly leaving the beaten track of strict view of the concept of capital expenditure and started being benevolent in interpreting the concept of revenue expenditure, and w....

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....t,- 4. ...While holding that the amount of Rs. 1,50,000/- paid to the Registrar of Companies as filing fee for enhancement of the capital was not revenue expenditure, this Court has said:- "We do not consider it necessary to examine all the decisions in extenso because we are of the opinion that fee paid to the Registrar for expansion of the capital base of the company was directly related to the capital incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of a capital expenditure since the expenditure was directly related to the expansion of the capital base of the company. we are, therefore, of the opinion that the view taken by the diffe....

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....he above quoted observations of this Court in m/s Punjab State Industrial Development Corporation Ltd. Chandigarh (supra) clearly indicate that though the increase in the capital results in expansion of the capital base of the company and incidentally that would help in the business of the company and incidentally that would help in the business of the company and may also help in the profit making, the expenses incurred in that connection still retain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. 8. It is, therefore, clear that while considering the contingency like where the object of enhancement of the capital was to have more working funds for the....