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TMI Blog2005 (12) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... re expenses of Rs. 5,38,027 relating to share issue expenses were debited under different heads as under: (Rs) (Rs) (i) Misc. expenses as 1,80,705 discussed above (ii) In legal and professional expenses: (a) To resources management 15,000 group, Bhilwara Spin FCD issue legal discussion (b) Financial consultancy 40,000 to Dogra & Associates (c) For guideline project 1,41,222 appraisal fee certificate and appraisal fee to SBBJ. 1,00,000 (d) Various stock brokers 61,000 3,57,322 stock share expenses -------- -------- Total 5,38,027 -------- 3. The AO found that these expenses were incurred in connection with the issue of share capital which are essentially of capital nature and not allowable as revenue expenditure as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions of the Hon'ble Supreme Court and that of other Hon'ble High Court inclu9ing the Hon'ble jurisdictional High Court are a authority on subject where such expenses are made by the object of enhancement of capital base of the company but where the object of such enhancement of capital was to have more working funds for the assessee to carryon its business and to earn more profit, the ratio is not applicable. While making the above submissions, the learned Authorised Representative invited our attention to the decision of the Hon'ble apex Court in Brooke Bond India's case where the Hon'ble Judges have observed that the increase in the capital was to meet the need of working fund of the assessee-company was not indicated by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition to expenses in column NO.4 towards expenses relating to issue of public issue amounting to Rs. 1,07,300. All other expenses are related to share capital issue and cannot be allowed as revenue expenditure. We have seen the nature of all these expenses, which are placed in the paper book from 1 to 18. All the other expenses are clearly connected with the issue capital shares, in one form or the other. Each and every item of such expenses was referred and discussed in the open Court at the time of argument. The finding of the learned CIT(A) is set aside to that extent. Therefore, this ground of appeal is partly allowed. 6. The next ground of appeal has been taken by the Department against the deletion of addition of Rs. 1,53,50,532 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em was allowable as per law. Secondly, the claim is still available even if this machinery or items are considered as parts of plant and machinery under repairs/replacement. 7. We have heard the rival submissions and perused the evidence on record. 8. Before us, it was demonstrated by referring to the pictographs of various processes involved in the factory of assessee-company and it was submitted by learned Authorised Representative that all plant and machinery put together amount to a single unit and no new assets are created in the process of replacement of worn out machines. Reliance has been placed by the learned Authorised Representative on the decision of the Hon'ble Madras High Court in the case of CIT vs. Janaki Ram Mills Ltd. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction taking note of the business needs and commercial expediency especially in a competitive business environment created by the globlization and not by applying old concepts of what is capital and what is revenue. The Hon'ble Court has also observed that ss. 31 and 37 do exist even after the introduction of block of assets concepts and have not become otiose or redundant. Therefore, we are of the considered opinion that the claim of 100 per cent depreciation on these items is allowable to the assessee-company because such expenditure is definitely an expenditure of revenue nature as the same is required for the running of machinery and plant which when put together amounted to a single unit. 10. The other reason taken by the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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