TaxTMI 
TaxTMI 
2025 (3) TMI 1211
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....y the SEBI approved the due date of 04.10.2019 and hence the Legal and Filing Cost was allowable U/sec 37 no enduring benefit has accrued to the assessee as no new asset was acquired. 1.2. The said C.I.T.(Appeals) also erred in not considering the fact that there was a Offer for Sale (OFS) by existing shareholders to Public and it was not an IPO during A.Y.2021-22 and also erred in not considering the fact that the expenditure on OFS were incurred by the said shareholders and not by the Appellant and therefore that cannot be the ground to disallow aborted IPO expenditure U/sec 37 of the. 1.3. The said C.I.T.(Appeals) erred in following the decision of Supreme Court in the case of Brooke Bond India Ltd. 225 ITR 798 ignoring the fact that the said expenditure was towards Legal & Professional Fees, SEBI Fees, Stock Exchange Fees and not for increase in Authorized Share Capital. 2. No Interest granted U/sec 244A on Tax Refund On the facts and circumstances of the case and in Law, the said A.O. erred in not granting any interest U/sec 244A on the due income tax refund since the date of filing of income tax return. 2. Briefly stated, facts of the ca....
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....IT 237 ITR 639 sustained the disallowance observing as under: "4.2.3 It is further notable that, as per the decision of Hon'ble High Court of Delhi in the case of Triveni Engineering Works Limited (vs) CIT 237 ITR 639, wherein, it has been held that, legal and professional charges incurred in connection with the merger of the company is not deductible as revenue expenditure. 4.2.4. It has been held in the following decisions of various judicial forums that, the expenditure incurred to maintain the capital base as per the FERA requirements can be construed to be a capital expenditure due to the fact that, the end result is restructure of the capital base: a) Eskayef Limited (vs) DCIT, 71 ITD 419 (ITAT, Bombay) b) Union Carbide India Limited (vs) CIT, 203 ITR 584 (Cal.) c) CIT (vs) Kotak India Limited 253 /TR 445 (SC) In view of the above, I am of the considered view that, the expenditure incurred by the appellant to the tune of Rs. 10,22,10,000/- being expenses of certification fees and other services in connection with the issuance of IPO are capital in nature and the same is not allowable as deduction u/s 37 of the Act as r....
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....res under the OFS. 4.2 Before us, the Ld. counsel for the assessee relied on the decision of the Hon'ble Bombay High Court in the case of CIT v. Nimbus Communication Ltd. (supra). The Ld. counsel submitted that the Assessing Officer erred in holding that the IPO expenditure incurred till 31.03.2019 was capitalized ignoring the fact that same was shown "other current assets. He further submitted that the lower authorities had ignored the fact that IPO during AY 2022-23 was 'OFS' by the promoters only and the whole proceedings of the OFS IPO was received by the promoter and not by the assessee, whereas the lower authorities have completely ignored the said fact. With reference to the decision of the Hon'ble Supreme Court relied upon by the Ld. CIT(A). The Ld. counsel submitted that said decisions are on expenditure incurred increase in the authorized share capital and therefore are not applicable to the case of the assessee. 4.3 Thus issue in dispute before us is, firstly, whether the expenditure incurred by the assessee for raising fresh capital of Rs. 1000/- crores pertained completely to the proposed equity share capital of Rs. 400 crores for the assessee or was partly relat....
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.... the learned counsel, the said view of the High Court is not in consonance with the law laid by the this Court in Empire Jute Company Ltd. v. Commissioner of Income Tax, 124 ITR 1; Commissioner of Income Tax. Bombay-II v. Associated Cements Co. Ltd., 172 ITR 257 and Alembic Chemical works Co. Ltd. v. Commissioner of Income Tax. Gujarat, 177 ITR 377. The learned counsel has also invited our attention to the decisions of the High Courts of Andhra Pradesh, Kerala and Madras High Court in Kisenchand Chellaram (India) P. Ltd. (supra). [See: Warner Hindustan Ltd. v. Commissioner of Income Tax (A.P.), 171 ITR 224; Hindustan Machine Tools Ltd. (No. 3) v. Commissioner of Income Tax, Karnataka-II, 175 ITR 220 and Federal Bank Ltd. v. Commissioner of Income Tax, Kerala. 180 ITR 241]. We find that this matter has come up for consideration before this Court in m/s Punjab State Industrial Development Corporation Ltd., Chandigarh v. Commissioner of Income Tax. Patiala. (Tax Reference No. 1 of 1990 decided on December 4, 1996). In that case, the question under consideration was whether an amount of Rs. 1,50,000/- paid to the Registrar of Companies as filing fee for enhancement of capital ....
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....capital was undertaken by the assessee in order to meet the need for more working funds for the assessee. We, therefore, cannot proceed on the basis 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, In any event, the 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. In these circumstances, we do not find any merit in the appeal and it is accordingly dismissed. No order as to costs. 4.4 The Hon'ble Supreme Court(supra) has held that expenses incurred in connection with the issuance of shares, whether for an increase in authorized sha....