TMI Blog2016 (10) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the assessee before it. It does not give rise to any inflow of fresh funds as the capital employed continues to remain the same. Nor is there any benefit of enduring nature received on issue of bonus shares. Therefore, the expenses incurred for issue of bonus shares are to be allowed as revenue expenditure. Investment allowance on the foreign exchange fluctuations - Held that:- The impugned order of the Tribunal has allowed the Assessee's appeal before it by following its order for the Assessment Year 1984-85 in the Assessee's own case. The Revenue has not brought anything on record to show that it was aggrieved by the order of the Tribunal for Assessment Year 1984-85 and it had appealed to a higher forum. Therefore, the Revenue could have no grievance with the impugned order as it merely follows its order for the earlier Assessment Year 1984-85 which has been accepted by it. Also in case of Associated Bearing Co. Ltd. vs. CIT [2005 (10) TMI 75 - BOMBAY HIGH COURT] held investment allowance on the increased amount, consequent to foreign exchange fluctuations, is allowable. Addition being interest attributable to the interest free advances made to subsidiaries u/s 36 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated in the Director's Report, without appreciating that as per the provisions of section 32 of the Act the depreciation is allowable only when the asset is used by the assessee for the purpose of business or profession during the relevant year . 2. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing the expenditure of ₹ 1,12,500/being fees paid to the Registrar of Company for increase in the authorized share capital of the company, without appreciating that the same was not allowable as per decision of Apex Court in the case of Brooke Bond India Limited Vs. CIT (225 ITR 798). 3. Whether the Tribunal was correct in law in allowing the investment allowance on the foreign exchange fluctuations, without appreciating that the same was not allowable as per the decision of the jurisdictional High Court in the case of Khatau Makanji Spinning Weaving Co. Ltd. (222 ITR 472) and of the Apex Court in the case of Arvind Mills Ltd. 193 ITR 255. 4. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the addition of ₹ 97,00,957/being interest attributabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al question of law arises. Thus, not entertained. 4. Re. Question (2): (a) We find that the impugned order of the Tribunal has allowed the Respondent Assessee's appeal before it by following the decision of the Apex Court in the case of CIT vs. General Insurance Corporation 286 ITR page 232. The issue arising herein is with regard to the nature of expenditure incurred in connection with issuance of bonus shares, is it capital or revenue expenditure. The Revenue contends that the same cannot be allowed as revenue expenditure as it is capital expenditure. (b) This very issue arose for consideration before the Apex Court in General Insurance Corporation (supra), wherein the Court held that in case of issue of bonus shares, there is no increase in capital structure of the respondentassessee before it. It does not give rise to any inflow of fresh funds as the capital employed continues to remain the same. Nor is there any benefit of enduring nature received on issue of bonus shares. Therefore, the expenses incurred for issue of bonus shares are to be allowed as revenue expenditure. (c) Mr. Suresh Kumar, learned Counsel appearing for the Revenue, contends that expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the decision of this Court in Associated Bearing Co. Ltd., (supra), no substantial question of law arises for our consideration. Therefore, not entertained. 6. Re. Question (4): (a) The impugned order of the Tribunal has allowed the Respondent Assessee's appeal before it on the issue raised herein by following its decision rendered in respect of the same Respondent Assessee for the Assessment Year 1985-86. (b) The grievance of the Revenue before us is that the interest attributable to interest free advance of funds made to its subsidiaries out of interest bearing funds cannot be allowed as a deduction under Section 36(1)(iii) of the Act in view of the decision of this Court in Phaltan Sugar Works Ltd. vs. C.W.T. 208 ITR 989. This reliance upon the decision of this Court in Phaltan Sugar (supra) is of no avail as it has been overruled by the Apex Court in S.A. Builders vs. CIT 288 ITR page 1 holding that the test of commercial expediency is to be applied. (c) Mr. Suresh Kumar, learned Counsel appearing for the Revenue, states that nothing is available on record to indicate any challenge in appeal by the Revenue to the order of the Tribunal for A.Y. 1985-86. The imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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