2021 (9) TMI 980

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..... llowing the expenditure incurred in respect of "documents and stamp charges" of Rs. 39,27,000/- on account of increase in authorized capital and treated the same as capital expenditure. Assessee alternatively pleaded that claim of deduction of impugned expenditure otherwise may be allowed under section 35D of the Income Tax Act, 1961. 3. We take note of brief facts as emanating from orders of the Revenue authorities. That the assessee is manufacturer of machines and complete plants for ceramics, packaging and food industries; that the assessee has filed its return of income on 29.9.2014 declaring total loss at Rs. (-)5,83,76,539/-. Thereafter, case of the assessee selected for scrutiny assessment and notice under section 143(2) of the Act .....

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..... essee was accordingly disallowed. Appeal to the CIT(A) could not bring any relief to the assessee, hence, assessee is before the Tribunal. 4. Before us, the ld. counsel for the assessee reiterated submissions as were made before the Revenue authorities. 5. On the other hand, the ld. DR supported orders of the Revenue authorities. He submitted that by way of increase in share capital, the assessing company has got enduring benefit and the expenditure incurred by the conversion of equity shares has to be treated as capital expenditure. He relied decision of the ITAT, Ahmedabad Benches in the case of Gruh Finance Ltd. Vs. ACIT, 160 ITD 89, decision in the case of VXL INDIA LTD Vs. ACIT, Tax Appeal No. 481 of 1999. Since assessee has incurred .....

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..... find the Section 35D of the Act does not contemplates allowance of expenditure incurred after the commencement of business that too for the expenditure incurred for conversion of debenture into equity share capital. As per Section 35D, any capital expenditure incurred before the commencement of operation of specified business then such expenditure is allowable as a deduction under the income tax in 5 equal annual installments subject to the fulfilment of different conditions given under the Income Tax Act. That was not the case on our hand for the reasons narrated above. The ld. Revenue authorities is, therefore rightly rejected this alternative claim of the assessee. Therefore, no intervention at our end is required on this issue as well. .....

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