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2010 (11) TMI 706 - AT - Income TaxAdjustment to deferred tax liability - Book profit u/s 115JB - Deduction u/s 35D - Tribunal in assessee's own case decided the issue in favour of Revenue by virtue of the amendment made in section 115JB through insertion of clause (h) in the Explanation thereto with retrospective effect from 01.04.2001 by the Finance Act, 2008 - Decided against the assessee Regarding consultancy charges - Capital or revenue expenditure - The land was ultimately not acquired due to some legal intricacies. It was not due to scrapping of any new project that we did not acquire the land - Applying the Test of 'enduring benefit' as laid down in many judicial pronouncements for determining the nature of expenditure, it can be regarded that the expenditure is not a capital expenditure in absence of any enduring benefit from the same - it is a settled law that profits should be computed after deducting the losses and expenditure incurred for the purpose of business unless the losses and expenditure ore expressly, or by necessary implication disallowed by the Act - It is well settled law that capital expenditure is not allowable while computing the income under the head 'profit and gains of business and profession - Assessing Officer will examine the same and ascertain the true nature of payment, if required may make cross verification from M/s. Vital Link Associate and re-adjudicate this addition afresh in accordance with law It is pertinent to note that the expenses amounting to Rs.1,10,000/- was incurred for the purpose of business and no personal benefit is derived by the assessee-company - his social function was organized to promote the business of the assessee-company. In these circumstances, we are of the view that the Learned Commissioner of Income Tax (Appeals) should have taken a lenient view and allow the entire expenses of Rs.1,10,000 - Decided in favour of the assessee Regarding deduction u/s 35D - The company is operational and expenses were incurred for increasing the capital and not for raising the initial capital or for registering the Company with Registrar of Companies - High Court in the case of CIT vs. Hindustan Insecticides Ltd., (2001 -TMI - 14155 - DELHI High Court) wherein it is held that under section 35D(2)(c)(iii) of the Act, only fees paid for registration of a company is deductible. Fees paid for increase in share capital is not fees for registration of the company, and hence is not amortizable under this provision - Decided against the assessee
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