TMI Blog2021 (9) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... verted into equity shares and assessee company had got enduring benefits therefrom and therefore, the expenditure incurred by the assessee on conversion of convertible debentures into equity shares has to be treated as capital expenditure. For which, the ld. CIT(A) relied upon the judgment of Brooke Bond India Ltd.[ 1997 (2) TMI 11 - SUPREME COURT] . Thus, we are of the view that the ld. Revenue authorities have taken a correct view of the matter while disallowing claim of the assessee. Alternate claim under section 35D - 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 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 was issued and served upon the assessee. During the assessment proceedings, the ld. AO noticed that the assessee debited a sum of ₹ 39,76,324/- as Document and Stamp Charges in its accounts as revenue expenditure, which related to expenditure incurred for increasing authorized share capital. The assessee was show-caused as to why this expenditure be not treated as capital expenditure since expenditure related to capital forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit 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 the expenditure on issue of convertible debenture, which is directly related to the expansion of capital base of the company, as held by the Hon'ble High Court such expenditure is to be treated as capital expenditure. 6. We have considered rival submissions and gone through the record carefully. We find that main issue for our consideration is that whether the expenditure on conversion of debenture bond into equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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