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Deduction u/s 35D(2)(c)(iv) - whether the expenditure incurred by the Appellant in connection with the issue of Right Shares to the public is not covered under Section 35D(2) (c ) (iv) ? - Held that:- A reading of the 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 Companies Act, be construed as including a reference to offering the shares to any section of the public also. In other words, insofar as the Companies Act is concerned, the section of the public holding shares in a company would be treated as public, for the purposes mentioned in Section 67. It is also clear from Section 67, that the purposes of the Section would include rights issue of shares under Section 81 of the Companies Act also. Therefore, when the scope and purport of Section 35D(2)(c)(iv) of the Income Tax Act is examined, this Court is entitled to refer to the provisions of Section 67 of the Companies Act and if so done, the inevitable conclusion is that the term for “public subscription” employed in Section 35D(2)(c)(iv) of the Income Tax Act would include subscription by a section of the public, i.e., the existing shareholders in a Company as well. Any interpretation to the contrary would lead to a situation where the benefit of amortization would be available to public issue of shares and the same benefit would be denied when shares are issued by Companies on rights basis.

Sum and substance of the above discussions that the findings of the Assessing Officer confirmed by the First Appellate Authority and the Tribunal is unsustainable. Therefore, answering the questions of law in favour of the assessee and against the revenue





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