TMI Blog2002 (6) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... balance 9/10th of expenditure amounting to ₹ 53.29 lakhs as revenue expenditure incurred for raising loans through the convertible debenture issues without appreciating the facts on which the Assessing Officer in the assessment order was based, treating the said expenses as Preliminary expenses and restricted the deduction 1/10th of ₹ 59.21 lakhs under sections 35D of the Income-tax Act, 1961 and the learned CIT(A) failed to take into account the decision of the Bombay High Court in the case of Bombay Burmah Trading Corporation 145 ITR 793, Karnataka High Court in the case of Motor Industries Ltd. 173 ITR 374 and Andhra Pradesh High Court in the case of Vazir Sultan Ltd. 174 ITR 689. 2. In respect of the transitional previous year consisting of 18 months, the assessee filed a return declaring income of ₹ 1.47 crore, which was revised to ₹ 1.51 crores whereas the assessment was completed on a total income of ₹ 1.55 crores. The assessee issued debentures and incurred expenditure of ₹ 22,100 towards Stamp Duty in respect of debenture allotment and also incurred other expenditure of ₹ 59.22 lakhs, with reference to issue of debentures. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to 1/10th of such expenditure.... (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely; (c) where the assessee is a company, also expenditure - (iv)in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus. 7. He submitted that specific provisions of the Income-tax Act shall override the general provisions/residuary provisions. In the instant case, the expenditure being allowable under section 35D of the Act, the same cannot be considered/allowed under section 37(1) of the Income-tax Act, 1961. 8. On the other hand, the learned counsel for the assessee submitted that the issue is fully covered in favour of the assessee by the decision of the ITAT, A Bench, Mumbai in the assessee s own case for the assessment year 1992-93 (ITA No. 50/Bom/96 dated 6-5-1996). He also relied upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the applicability of section 35D of the Act through a specific ground was urged in that regard as noted in para 16.1 of the Order of the ITAT. He further submitted that the Circular issued by the CBDT cannot over-ride the provisions of the Act and in the instant case, the Circular issued by the CBDT supports the contention of the Revenue rather than the assessee, inasmuch as, the assessee claimed in its original return that it is entitled to amortise the expenditure incurred on issue of debentures under section 35D of the Act, and thus, the case falls under the exception mentioned in para 45 of the Circular. The learned Departmental Representative, vide letter dated 11-6-2002, brought to our notice that a Miscellaneous Application was filed against the Order of the I.T.A.T., passed for the assessment year 1992-93. Though the M.A. was filed in 1996, it was not disposed of till date. As could be seen from the M.A. filed before the Tribunal, the Revenue contends that the Order of the Tribunal suffers from a mistake apparent from record since the decision was rendered without giving any finding on the alternative submission made by the Department on the strength of section 35D of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lify for deduction under any other provision of the Income-tax Act as stated in para 45 of the Circular issued by the CBDT. 13. As per the decision of the Supreme Court in the case of India Cements Ltd. (supra) the expenditure incurred on issue of debentures is allowable under section 37(1) of the Income-tax Act. What is contemplated was that any expenditure which is not an expenditure of the nature described in sections 30 to 36 of the Income-tax Act, can be considered for allowance under the residuary provision, i.e., section 37(1). A plain reading of section 37(1) shows that in order to qualify for deduction under section 37(1), it should be an expenditure which is not of the nature described in sections 30 to 36 of the Act. However, in the instant case, it is not in dispute that the expenditure incurred by the assessee is of the nature described in section 35D of the Act and, therefore, the assessee is debarred from making a claim under section 37(1) of the Act. 14. It is well settled that when there is a specific provision dealing with a particular claim, the same has to be considered under the specific provision and not under the general/residuary provision. This aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
