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2017 (2) TMI 503 - AT - Income TaxDisallowance of fee paid to Registrar of Companies for increase in authorized capital of the company - Held that:- Hon’ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited vs CIT [1996 (12) TMI 6 - SUPREME Court ] and Brooke Bond India Limited vs CI (1997 (2) TMI 11 - SUPREME Court ) held that fees paid to ROC for increase in authorised share capital is a capital expenditure. As far as the question of allowing deduction of the expenses in question u/s 35D of the Act is concerned, the list of expenses allowable for deduction u/s 35D(1) of the Act are set out in section 35D (2) of the Act. The list of expenses set out in section 35D(2) of the Act does not include fees paid to ROC for increase in the authorised share capital. Under section 35(2)(c)(iv) of the Act expenses in connection with the issue of shares to the public is allowable as deduction. Admittedly in this case there was no public issue of shares and therefore the expenses in question does not fall within the ambit of aforesaid clause. We are therefore of the view that order of CIT(A) on this issue does not call for any interference. - Decided against assessee Disallowance of prior period expenses - Held that:- The said maintenance expenses relate to March, 2008 for which a bill dated 04.04.2008 was received by the assessee only in the month of April, 2008 and was booked as expenses pertaining to A.Y.2009-10. It has been claimed by the assessee that all the other expenses given in the annexure are of similar nature. Keeping in view the submissions of the ld. Counsel for the assessee and also the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs Modipon Ltd. (2010 (12) TMI 836 - Delhi High Court ), we are of the view that expenses in question accrued or arose as liability to the assessee only during the previous year relevant to A.Y.2009-10. The claim of the assessee for deduction of the aforesaid sum deserves to be accepted. Accrual of income - Assessee in the present case follows mercantile system of accounting - Held that:- The parties by an agreement cannot alter the time of accrual of income under the mercantile system of accounting. Income under the mercantile system will accrue and arise when the right to receive the sum in question is determined. Such right to receive the sum in question and its accrual under the mercantile system cannot get postponed by agreement between the parties. The argument that the Assessee followed percentage completion method or completion contract method of Accounting, is again not acceptable, because the income in question, in so far as the Assessee is concerned, does not arise from execution of any construction contract by it. It arises out of the Assessee’s action of trading the built up space which it was to get by virtue of its agreement for building new market with KMC. The argument that even BBMPL recognised income only on the basis of completion of construction, is again irrelevant when it comes to determining income of the Assessee. The fact that the Assessee was offering to tax income as and when bare construction was completed is again not relevant. It was argued by the learned counsel for the Assessee that the revenue has taxed income offered in the subsequent years by the Assessee and taxing the same income in the present AY would amount to double taxation of the same income. We are of the view that these factors cannot decide the accrual of income in the hands of the Assessee. If there is double taxation of the same income then it is for the Assessee to work out its rights in a manner known to law. - Decided against assessee
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