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2016 (5) TMI 523 - ITAT NAGPUR

2016 (5) TMI 523 - ITAT NAGPUR - TMI - Allowability of payment to ROC as charges of Registrar of Companies - Held that:- Issue of allowability of the expenditure depends upon the nature of the expenditure as well as the time when the expenditure was incurred. The Revenue authorities have not specifically placed on record that whether the entire expenditure was in the nature of payment to ROC as charges of Registrar of Companies. We, therefore, deem it proper to restore this issue back to the fil .....

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amp at Nagpur), order dated 18-12-2012. The only grounds which are raised before us are ground No. 3 and 4 reproduced below : 1. The addition made on account of disallowance of expenditure as capital expenditure for ₹ 11,60,000/- is incorrect, illegal, bad in law and is to be deleted. 2. The denial of amortization of capital expenditure is also bad in law and without natural justice. 2. At the outset it is necessary to mention that rest of the grounds challenging the notice issued u/s 142( .....

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penditure was not specified u/s 35D of I.T. Act. Accordingly the total amount of ₹ 11,60,000/- was added in the taxable income. The bifurcation of the said expenditure as noted by the AO is reproduced below : ROC to increase authorized share capital ₹ 1,98,000/- ROC to increase authorized share capital ₹ 5,80,000/- Stamping of share certificate ₹ 17,000/- Stamping of share certificate ₹ 1,95,000/- Stamping of share certificate ₹ 1,70,000/- 4. When the matter w .....

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the other hand states these being revenue expenditure are allowable and has relied upon the case laws mentioned above. Perusal of the jurisdictional Bombay High Court decision in the case of Bombay Burma Trading Co. Ltd., (supra) relied upon by the appellant, shows that Question No.3 which was before the Hon ble High Court in reference, viz., Whether, on the facts and in the circumstances of the case, the sum of ₹ 47,250/- paid as fees by the assessee to the Registrar of Companies for the .....

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he 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. The Hon ble Supreme Court have rendered their decision after duly considering the judgments mentioned at (a), (b), (c), (d) and (f) at para 2.2 which have been relied upon by the appellant. In view of the aforesaid judgment it is clear that expenses as have been claimed for increasing .....

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uctible, that fees paid for increase in authorised share capital is not fees for registration of the company and is not amortisable U/s. 35D. In view of this position the alternative plea of amortisation is also not maintainable, and is accordingly dismissed 5. On this short issue we have heard both the sides. At the threshold learned A.R. has mentioned that the facts have not been clearly understood by the Revenue authorities. The exact nature of the expenditure incurred was as under : During t .....

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. 3. Stamping Charges for Share Certificate issued ₹ 17,000/- 4. Stamping Charges for Share Certificate issued ₹ 1,95,000/- 5. Stamping Charges for Share Certificate issued ₹ 1,70,000/- Total Expenses for issue of Share (a) Fee paid ROC for increase of authorised share capital ₹ 7,78,000/- (b) Stamping Charges for share Certificate issued ₹ 3,82,000/- Total ₹ 11,60,000/- 5.1 It was explained that thereupon the assessee company had raised the share capital by i .....

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s incurred for increase of the authorized capital for the operation of the company, hence not capital in nature. It has also been pleaded that on perusal of the nature of expenditure it was nothing but a revenue expenditure. Reliance was placed on Punjab Industrial Development Corporation 225 ITR 792, Brook Bond India Ltd. 225 ITR 798 and a decision of ITAT, Chennai Bench in the case of Laxmi Auto Components 303 ITR 0028. 6. We have examined the facts of the case in the light of the decisions ci .....

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