TMI Blog2021 (5) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) AO. On considering the totality of the facts of the case also remit this back to the file of the AO for verification of bills and vouchers and the same are found in order, the AO is directed to allow these expenses as revenue expenditure for the impugned AY. Accordingly, this ground is allowed for statistical purposes. Addition towards carry forward loss - HELD THAT:- We find that the assessee has not pressed this ground before the CIT(A), but, the same has been pressed before us. Therefore, we restore this ground back to the AO for his factual verification. Thus, this ground of appeal is treated as allowed for statistical purposes. - ITA No. 2178/H/2018 - - - Dated:- 5-5-2021 - Shri Satbeer Singh Godara, Judicial Member And Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri P. Murali Mohana Rao For the Revenue : Shri Rohit Mujumdar ORDER PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A) - 4, Hyderabad s order dated 28/09/2018 involving proceedings u/s 143(3) of the Income- Tax Act, 1961 ; in short the Act. 2. Briefly the facts of the case are that the assessee company, engaged in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the P L account as allowable expenditure connected with the business activity by treating the same as revenue expenditure. In this connection, we would like to submit that the expenditure incurred for the enhancement of authorised capital is only for the purpose of bettering or improving, an established business and cannot to be for the purpose of a new business. If the same is viewed in a business sense, the enhancement of the authorised capital is only to have better conduct, efficiency and profitability of the business. At this juncture it is to bring to your notice that The fee paid by the company to ROC is undoubtedly connected with and advantageous to the business activity of the assessee. The fee paid is paid is towards working capital purpose of the assessee. It was stated by the AO that the assessee is having an enduring advantage for the benefit of its business. However, it is to bring to your notice that the assessee did not secure any tangible or intangible asset and there was no addition to or expansion of the profit-making apparatus. It is further bring to your notice that it is very well settled principle that a provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Registrar for enhancement of capital. Therefore, the said provision was rightly applied to the present case by the Income tax Appellate Tribunal. Under these provisions, deduction of expenditure incurred for registration is to be spread over a period of ten years and is not allowable in the year in which the expenses are incurred. To uphold the submission of the Revenue that expenditure incurred for obtaining registration would not be allowable either under subsection (2)(c)( iii) or sub-section (2)(c)( io) of section 350 would defeat the obvious intention of the Legislature and would produce a wholly unreasonable result To achieve the obvious intention and produce a reasonable result, 'we have to hold that under subsection (2)(c)(iv) of section 350, the expenditure incurred for obtaining registration would be liable to be deductible. We, consequently, hold that the fee paid to the Registrar of Companies for raising authorised capital of the assessee company was covered by sub section (2)(c)(iv) of section 350 of the Income-tax Act. DCIT Vs. Mercury Projects Pvt. Ltd in ITA No. 440/Hyd/2018 (Para 16, Page 23-24) Respectfully following the ratio laid down b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of the assessee commences; (ii) in a case referred to in clause (ii) of sub- section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the extension of the industrial undertaking is completed or, as the case may be, the new industrial unit commences production or operation, in so far as such fixed assets have been acquired or developed in connection with the extension of the industrial undertaking or the setting up of the new industrial unit of the assessee; (b) capital employed in the business of the company means- (i) in a case referred to in clause (i) of sub- section (1), the aggregate of the issued share capital, debentures and long- term borrowings as on the last day of the previous year in which the business of the company commences; (ii) in a case referred to in clause (ii) of sub- section (1), the aggregate of the issued share capital, debentures and long- term borrowings as on the last day of the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
