TMI Blog2015 (12) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee - ITA No. 189 of 2014 (O&M) - - - Dated:- 10-8-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Ravi Shankar, Advocate For The Respondent : Ms. Urvashi Dhugga, Advocate Ajay Kumar Mittal,J. 1. The assessee has filed this appeal under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 28.10.2013, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (in short, the Tribunal ) in ITA No.1386/CHD/2010 for the assessment year 2006-07, claiming following substantial question of law:- Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal is justified in disallowing de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 11.8.2010, Annexure A.2 confirmed the same but allowed the issue of the disallowance of ₹ 1,50,000/- being depreciation claimed at the rate of 15% on fee paid to Registrar of Companies amounting to ₹ 10 lacs for increase in authorized capital base. Separate appeals were filed by the assessee and the revenue before the Tribunal. Vide order dated 28.10.2013, Annexure A.3, the Tribunal reversed the order of CIT(A) on this issue and confirmed the action of the Assessing Officer regarding disallowance of depreciation @ 15% on fee paid to the Registrar of Companies. Hence the instant appeal by the assessee. 3. We have heard learned counsel for the parties. 4. The primary issue that arises for consideration in the present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the successive previous year. It was claimed that an application bearing CM No.10420 CII of 2015 has been filed under Section 151, Code of Civil Procedure claiming reframed question of law in this regard. 6. Conversely, learned counsel for the revenue supported the order passed by the Tribunal and maintained that the assessee had been rightly disallowed depreciation of ₹ 1,50,000/- by the Assessing Officer and the Tribunal. Relying upon judgment of the Delhi High Court in CIT vs. Hindustan Insecticides Limited (and vice versa) (2001) 250 ITR 338, the claim of the assessee under Section 35D (2)(c) (iv) of the Act was also disputed. 7. The amount of fees paid to Registrar of Companies for augmenting the aforesaid share capital fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the company was directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of a capital expenditure, since the expenditure was directly related to the expansion of the capital base of the company. 21. The Apex Court by giving the above finding, concluded that amount paid to Registrar of Companies as filing fee for enhancement of capital is capital expenditure. 22. In view of the above, I find that the AO has wrongly denied the claim of depreciation of ₹ 1.50 lacs on fee paid to Registrar of Companies, thereby allowing the appeal on this ground. 8. Examining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-company and the provision should be so interpreted that the same be not against the assessee, particularly when its object was to benefit him. Learned counsel contended that the settled principle is that a provision of law capable of two interpretations should be interpreted in a manner so as to give benefit to the asses see. Sub-section (2)(c)(iii) of Section 35D is as under : 35D(2)(c)... (iii) by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956). The provision contained in Sub-section (2)(c)(iii) of Section 35D was resorted to by learned counsel for the assessee in the alternative in support of his submission that the expenditure incurred by way of enhancement of capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and CIT vs. Ashok Leyland Limited, (2012) 349 ITR 663 (Mad.), expenses incurred on issue of shares or public issue for expansion of existing unit were allowed to be amortized under Section 35D(2) (c) (iv) of the Act. 9. In so far as pronouncement of Delhi High Court in Hindustan Insecticides Limited's case (supra), on which revenue has placed reliance is concerned, that was a case relating to Section 35D(2)(c)(iii) of the Act which is different in its applicability from Section 35D(2)(c)(iv) of the Act. Thus, the argument of the revenue cannot be accepted. 10. Viewed from any angle, it is concluded that the claim of the assessee cannot be declined. Since the fees paid to Registrar of Companies for enhancing the authorized share ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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