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2021 (9) TMI 980 - AT - Income TaxNature of expenditure - Expenditure incurred in respect of "documents and stamp charges" - increase in authorized capital and treated the same as capital expenditure - whether the expenditure on conversion of debenture bond into equity share capital is revenue or capital expenditure? - alternate claim of deduction of impugned expenditure otherwise may be allowed u/s 35D - whether the expenditure on conversion of debenture bond into equity share capital is revenue or capital expenditure? - HELD THAT:- As observed by the ld. CIT(A), facts of the case of the assessee clearly indicate that portion of convertible debenture was converted into equity shares and assessee company had got enduring benefits therefrom and therefore, the expenditure incurred by the assessee on conversion of convertible debentures into equity shares has to be treated as capital expenditure. For which, the ld. CIT(A) relied upon the judgment of Brooke Bond India Ltd.[1997 (2) TMI 11 - SUPREME COURT]. Thus, we are of the view that the ld. Revenue authorities have taken a correct view of the matter while disallowing claim of the assessee. Alternate claim under section 35D - Section 35D of the Act does not contemplates allowance of expenditure incurred after the commencement of business that too for the expenditure incurred for conversion of debenture into equity share capital. As per Section 35D, any capital expenditure incurred before the commencement of operation of specified business then such expenditure is allowable as a deduction under the income tax in 5 equal annual installments subject to the fulfilment of different conditions given under the Income Tax Act. That was not the case on our hand for the reasons narrated above. The ld. Revenue authorities is, therefore rightly rejected this alternative claim of the assessee.
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