TMI Blog2022 (7) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... that would help in the business of the company and may also help in profit making, the expenses incurred in that connection still remain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. The observations of the Hon ble Apex Court in the case of Brooke Bond India Limited ( 1997 (2) TMI 11 - SUPREME COURT] are applicable to the facts of the case on hand on all fours. Irrespective of the fact of assessee increasing the capital base, whether it is for working capital or for creating the capital asset, the expenditure incurred in that connection still retains the character of capital expenditure to reach section 37(1) of the Act has no application and is gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 35D of the Act. Brief facts relating to this issue are that the assessee is a company engaged in the business of development of power project. In the return of income filed on 26/09/2009 for the assessment year 2009-10, the assessee claimed a deduction of Rs. 10,11,61,683/-under section 35D of the Act representing 1/5th of the total issue expense of Rs. 50,58,08,417/- and the same was allowed by the learned Assessing Officer in the order dated 29/12/2011 passed under section 143(3) of the Act. 3. In the appeal filed challenging certain other additions made by the learned Assessing Officer, the assessee preferred an additional ground claiming for a deduction of the entire expense of Rs. 50,58,08,417/- under section 37(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in its submission before him, held that the entire issue expenses of Rs. 50,58,08,417/- are allowable as deduction on revenue account under section 37(1) of the Act. Ld. AR made reference to so many decision in support of his argument that the courts are slowly leaving the beaten track of strict view of the concept of capital expenditure and started being benevolent in interpreting the concept of revenue expenditure, and what has traditionally been treated as capital expenditure is now being looked at as on revenue account. 6. We have gone through the record in the light of the submissions made on either side. P L Account of the assessee reflects administration and operating expenses to the tune of Rs. 10,41,28,612/- and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Registrar for expansion of the capital base of the company was directly related to the capital incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of a capital expenditure since the expenditure was directly related to the expansion of the capital base of the company. we are, therefore, of the opinion that the view taken by the different High Courts in favour of the Revenue in this behalf is the preferable view as compared to the view based on the decision of the Madras High Court in Kisenchand Chellaram's case. 5. This decision thus covers the question that falls for consideration in this appeal. 6. Dr. pal has, however, submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of the company and may also help in the profit making, the expenses incurred in that connection still retain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. 8. It is, therefore, clear that while considering the contingency like where the object of enhancement of the capital was to have more working funds for the assessee to carry on its business and to earn more profit and that in such a case the expenditure that is incurred in connection with the issue of shares to increase the capital has to be treated as revenue expenditure, the Hon ble Apex Court held that though the increase in the capital results in expansion of the capital base of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
