TaxTMI 
TaxTMI 
2014 (3) TMI 1228
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....es relating to Initial Public Offer, as revenue expenditure. The Assessing officer took the view that the said expenses have been incurred for increasing the share capital and hence they are directly related to the expansion of the Capital base of the company, in which case they fall in the category of Capital Expenditure. Accordingly, he disallowed the claim of the assessee. The Ld. CIT(A), by placing reliance on the decision of Hon'ble Supreme Court in the case of "Brooke Bond (India) Ltd. Vs. CIT (225 ITR 798), also confirmed the addition made by the Assessing officer. The assessee contended before the Ld. CIT(A) that the amount of interest computed u/s. 234C is not correct. However, the first appellate authority did not adjudicate the said issue. Hence the assessee has filed this appeal before us. 3. The first issue relates to the claim for deduction of "Initial Public Offer" expenses. During the year under consideration, the assessee raised additional capital by making public issue of its shares. In that regard, the assessee incurred a sum of Rs. 1,47,85,680/- as expenses. The assessee has decided to write off the above said expenditure in five instalments and according....
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....nt findings given by Ld. CIT(A) and Tribunal. The decision rendered by Hon'ble Karnataka High Court in the case of Indo Nissin Foods ltd. (supra) and also the decision rendered by the Calcutta High Court in the case of Berger Paints India Ltd. (supra) are not related to the Initial Public Offer expenses. In the case of Bombay Burmah Trading Corporation Ltd. (supra) and also in the case of Warner Hindustan Ltd. (supra), the issue related to the expenses incurred in connection with the issue of Bonus shares and not Initial Public offer. The decision rendered in the case of Metro Shoes (P) Ltd. does not relate to expenses incurred on Initial Public Offer. The decision rendered in the case of Nimbus Communication Ltd. relate to the expenses incurred on the proposed public issue, which was aborted later. Thus, in our view, all the case law relied upon by the assessee are not applicable to the facts of the instant case. 5. On the contrary, in our view, the decision rendered by Hon'ble Supreme Court in the case of Brooke Bond (India) Ltd. (supra) is squarely applicable to the facts of the instant case. We have already noticed that the Ld. CIT(A) has rendered his decision by fol....
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.... place reliance on a number of judicial pronouncements, which has been cited supra. 15.3 I Have gone through the judgment of the Hon'ble Supreme Court in the case of M/s. Brooke Bond India Ltd. The Hon'ble Apex Court in the said judgment has held as under: It is no doubt true that before the AAC as well as before the Tribunal it was submitted on behalf of the assessee that increase in the capital was to meet the need for working funds for the assessee company. But the statement of case sent by the Tribunal does not indicate that a finding was recorded to the effect that the expansion of the capital was undertaken by the assessee for the purpose of meeting the need for working funds for the assessee to carry on its business. 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 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. On the facts and in the circumstances of the case, the Tr....
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....ctor also by the Finance Act, 2008 by omitting the word "industrial" from sec. 35D of the Act. The Ld. Counsel submitted that the expenses incurred in connection with issue, for public subscription, of shares of the Company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of prospectus are covered under sec. 35D(2) of the Act. He further submitted that the preliminary expenses are allowed as deduction in five annual instalments u/s. 35D of the Act. Accordingly he submitted that the deduction claimed by the assessee is in terms of sec. 35D of the Act. 7. However, we notice that the alternative contention of the assessee for deduction u/s. 35D of the Act was not examined by the AO. Accordingly, in our view, the same requires to be considered at the end of the assessing officer. Accordingly, we restore this alternative contention to the file of the AO with the direction to examine the same and take appropriate decision in accordance with the law, after affording necessary opportunity of being heard to the assessee. 8. The next issue relates to the computation of interest chargeable u/s. 234C of the Act. According to the asses....