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2011 (2) TMI 1120 - AT - Income TaxCapital or revenue expenditure - expense paid by the assessee to M/s. Yes Bank against rendering of strategic and financial advisory services - alternative claim for deduction under section 35D - Held that:- In the present case, the payment was made by the assessee-company to M/s. Yes Bank for rendering of services in connection with issue of shares - Raising of capital block in the case a company is essentially an activity of enduring benefit and, therefore, the expenses incurred in connection with raising of capital block is also a capital expenditure and this position has been confirmed in Brooke Bond India Limited Versus CIT [1997 (2) TMI 11 - SUPREME Court] Payment made for services rendered in connection with the issue of shares to raise the capital block of the assessee-company - Held that:- Once shares are issued for cash, the assessee-company gets the funds in its hands and once the funds have come into the hands of the assessee-company, the process of issue of share capital is complete - Application of funds does not decide the character of the money collected against the issue of shares. Money collected against the issue of shares always remains capital - hence expenditure incurred is capital in nature. Regarding amortization - Held that:- The expenses incurred after commencement of the business, should be incurred in connection with extension of the undertaking or in connection with setting up of a new unit - An undertaking is always having an area of physical structure which produces goods and services by utilising the necessary factors of production - The expansion in the present case is in the business prospects of the existing undertaking - thus the expenditure incurred by the assessee-company in connection with the issue of shares do not qualify to be amortised under section 35D - Appeal is dismissed
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