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2019 (12) TMI 24 - AT - Income TaxAddition on account of capitalization of share listing expenses - HELD THAT:- The status of the company is one in which public is substantially interested and for that purpose listing of shares in the stock exchange would assume importance so far as the public limited company is concerned. The business of the company also carries better prestige and better status when its shares are listed in the stock exchange. Such listing adds several advantages to the business carried on by the company, particularly in the matter of confidence of customers and loyalty of employees, which generate value. The expenditure on account of listing fees paid to the stock exchange could not be said to be capital expenditure, and that it shall have to be regarded as expenditure of revenue nature. Therefore, for the reasons we do not find any infirmity in the order of the learned CIT – A in deleting the above disallowance noting that there is no increase in the capital base of the assessee company. In view of this, we dismiss ground number 1 of the appeal of the learned AO. Disallowance of 50 % of the expenditure on account of the community development donation expenses under section 37 (1) - HELD THAT:- Following the decision of the honourable Karnataka High Court in case of CIT vs. Infosys Ltd [2013 (7) TMI 451 - KARNATAKA HIGH COURT], we do not find any reason to sustain the order of the learned CIT – A upholding the above disallowance. Further the reasons given by the learned CIT – A that as the PSU are directed by Government Of India to incur certain expenditure in the form of corporate social responsibility, if such expenditure are allowed to them as deduction, then in case of private corporate assessee also the above expenditure is to be allowed. We do not find this “just‟ reason for confirming the disallowance. Express provision of disallowance of the corporate social responsibility expenditure is provided under explanation – 2 of the provisions of section 37 (1) of the income tax act with effect from 1/4/2014 by The Finance (Number 2) Act, 2014. Thus, prior to that it is clear that no such disallowance was provided in the law. As the honourable Karnataka High Court has held that such expenditure is allowable to the assessee u/s 37 (1) of the income tax act as it is wholly and exclusively incurred for the purposes of the business, we are of the view that such disallowance can only be made after 1/4/2015, if at all. - Decided in favour of assessee.
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