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2016 (10) TMI 195 - AT - Income TaxAddition u/s 35D - expenditure incurred for increase in Authorised Capital of the Company - Held that:- The assessee has debited an amount of ₹ 104,000/- as preliminary expenses on account of expenditure incurred in the case of fees and stamp duty payable to increase the authorized capital u/s. 35D of the I.T. Act We find that according to provisions of section 35D(ii) of the Act the kinds of expenses claimed by the assessee are not specifically covered in the section 35D(ii). Hon’ble supreme court in the case of Brook Bond India Ltd. [1997 (2) TMI 11 - SUPREME Court ] has held that the fees paid to registrar for increase in authorized share capital is a capital expenditure.In Commissioner of Income Tax vs. Hindustan Insecticides Ltd (2001 (2) TMI 75 - DELHI High Court ) held that the fee paid to Registrar of Companies for increasing the authorized capital is a capital expenditure. It is not possible to get such deduction under section 35D unless it is coupled with the extension of an industrial undertaking or in connection with setting up of a new industrial undertaking.We find that this disallowance was confirmed by the Ld. Commissioner of Income Tax(A) by giving a specific finding that the assessee is not fulfilling the conditions imposed under sub-sections (1) and (2) of section 35D, we, therefore, uphold the order of the Ld. Commissioner of Income Tax(A) - Decided against assessee Disallowance u/s. 14A - Held that:- We find that the assessee submitted before the lower authorities that it has not earned any exempt income during the year. The Assessing Officer has also not provided any detail of exempt income earned by the asssessse during F.Y. 2008-09. The Ld. Commissioner of Income Tax(A) held that the appellant has not been able to show before the Assessing Officer that no interest expenses have been incurred by it in relation to the assets capable of generating exempt income. The ld. counsel relied on the decision of the co-ordinate bench in the case of Shr Nandlal J. Agarwal vs. DCIT, Circle-1 Ahmedabad [2015 (7) TMI 1139 - ITAT AHMEDABAD] where it was held that the disallowance under section 14A cannot be made when no income is claimed to be exempt in that particular year after relying on the decision of Hon’ble jurisdictional high court in the case of Commissioner of Income Tax vs. Corrtech Energy (P) Ltd. (2014 (3) TMI 856 - GUJARAT HIGH COURT). In view of the above mentioned facts and circumstances and after considering the legal findings, we allow the appeal of the assessee on this ground as lower authority has not pointed out generation of any exempt income during the particular year. - Decided in favour of assessee.
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