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2016 (11) TMI 969 - HC - Income TaxExpenditure incurred in connection with the issue of share capital - revenue or capital expenditure - Held that:- We find that the Apex Court in Kodak India Ltd. (2001 (10) TMI 7 - SUPREME Court ), has held that expenses incurred in connection with issue of public shares to Indian public even when the issue of shares was done to comply with the directions of the Reserve Bank of India (RBI), would be an expenditure incurred in the capital field. - Decided against assessee Interest received on deposit of share application money - whether cannot be adjusted against the expenditure incurred in connection with the issue of such shares? - Held that:- This issue has been held in favour of the Applicant-Assessee by the decision in in Commissioner of Income Tax v/s. Shree Rama Multi Tech Ltd. [2012 (12) TMI 984 - GUJARAT HIGH COURT] held that the Assessee was statutorily required to keep the share application money in a separate account, till the allotment of shares is completed. Therefore, interest earned on such separately kept amount was adjustable towards the expenditure incurred for raising share capital. This is so as the earning of interest was inextricably linked with the requirement to raise share capital. In support, reliance was placed upon the decisions of the Apex Court in Commissioner of Income Tax v/s. Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME Court ] and Commissioner of Income Tax v/s. Karnal Cooperative Sugar Mills Ltd. [1999 (4) TMI 7 - SUPREME Court]. We are in respectful agreement with this decision of the Gujarat High Court. - Decided in favour of assessee
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