TaxTMI 
TaxTMI 
2026 (8) TMI 1785
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....ed by the appellant-assessee under section 260A of the Income Tax Act, 1961 (For short "the Act") against the common judgment and order dated 14.08.2008 passed by the Income Tax Appellate Tribunal, Ahmedabad (For short "the Tribunal") in ITA No. 2220/Ahd/2008 for the Assessment Year 2005-2006. 3. The appeal is admitted vide order dated 02.03.2010 for consideration of the following substantial question of law: "Whether, in the facts and circumstances of the case, Income Tax Appellate Tribunal was justified in law in holding that fees of Rs. 15,11,500/- paid to the Registrar of Companies in increasing the capital base of the assessee Company was not allowable under Section 35D(2)(c)(iv) of the Income Tax Act, 1961?" 4. The appe....
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....ges for drafting, typing, printing and advertisement of the prospectus. The learned Counsel for the assessee could not establish that the fees paid to the Registrar of Companies for increasing the capital base was in the nature of underwriting commission or brokerage or charges for drafting, typing, printing and advertisement of the prospectus so as to fall u/s 35D(2)(iv). The fee paid to the Registrar of Companies for enhancing the capital base would clearly fall outside the scope of section 35D(2)(iv) of the Income tax Act. It cannot therefore, be considered for amortization under the aforesaid provisions. In this view of the matter, the order of the CIT(A) is reversed and that of the AO restored. Ground No. 1 is allowed." 7. Learned a....
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....nd having considered the documents on record, in order to answer the question raised, it would be germane to refer to the provisions of section 35D(2)(c)(iv) of the Act which reads as under: "35D. Amortisation of certain preliminary expenses xxx (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely :- xxx (c) where the assessee is a company, also expenditure- (i) by way of legal charges for drafting the Memorandum and Articles of Association of the company; (ii) on printing of the Memorandum and Articles of Association; (iii) by way of fees for registering the company under the provision....
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....e of Nitta Gelatine India Ltd. (supra), after considering the provision of section 35D(2)(c)(iv) of the Act has held as under: "7. From a reading of this provision, it can be seen that where the assessee is an Indian Company, the expenditure incurred by it in connection with the issue of its shares for public subscription, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of prospectus, qualify for amortization as provided in the Section. Companies incorporated in India are permitted to issue shares to its existing shareholders and such issue of shares is governed by Section 81 of the Companies Act. This Section provides that such shares shall be offered to the persons who, at the....
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....nstruction of references to offering shares or debentures to the public, etc.-(1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture- holders of the company concerned or as clients of the person issuing the prospectus or in any other manner." 11. A reading of this provision shows that any reference in the Companies Act or in the Articles of a Company offering shares to the public shall, subject to the provisions of the Comp....
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....it can be continued to a section of the public as well. This principle has been laid down in paragraph 15 of the judgment, the relevant part of which reads as follows: "The expression "object of general public utility" however is not restricted to objects beneficial to the whole mankind. An object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or even all persons living in a particular country or Province. It is sufficient if the intention to benefit a section of the public as distinguished from specified individuals. Observations to the contrary made by Baumont, C. J., in Commissioner of Incom....