ASTRON PAPER & BOARD MILL LIMITED,AHMEDABAD vs. THE DY. CIT, CIRCLE-1(1)(2), AHMEDABAD

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ITA 2904/AHD/2017Status: DisposedITAT Ahmedabad05 March 2020AY 2014-154 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal followed its own earlier decision in the assessee's own case for a different assessment year. It held that the expenses incurred were in consonance with Section 35D and thus allowable.

What were the facts?

The assessee incurred expenses on the increase of authorized share capital and claimed 1/5th of these expenses under Section 35D. The Assessing Officer disallowed this claim, which was upheld by the CIT(A).

What were the issues?

Whether expenses incurred on the increase of authorized share capital are eligible for deduction under Section 35D of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 35D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD

Before: SHRI SANDEEP GOSAIN & SHRI AMARJIT SINGH

For Respondent: Shri Vidhyut Trivedi, Sr.DR
Hearing: 05/03/2020Pronounced: 05/03/2020

आदेश / O R D E R

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER :

1.

The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–1, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-1/DCIT Circle- 1(1)(2)/279/2016-17 dated 28/09/2017 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961(hereinafter referred to as "the Act") dated 29/11/2016 relevant to Assessment Year (AY) 2014-15.

2. The assessee has raised the following solitary ground of appeal:-

Astron Paper & Board Mill Ltd. vs. DCIT Asst.Year – 2014-15 - 2 -

1) The Hon’ble CIT(A)-1 without considering the provisions of section 35D, nature of expenditure incurred, facts of the case and judicial pronouncement in this regard wrongly confirmed the disallowance of Rs.4,36,400/- being 1/5th of Expenses incurred on increase of authorized share capital of the company and hence the same addition to total income be deleted now.

3.

Brief facts of the case are that the assessee has filed its return of income on 30/09/2014 declaring loss of Rs.(-) 6,36,83,518/-. The assessment order u/s.143(3) of the Act dated 29/11/2016 was passed in the case of the assessee thereby disallowing expenses incurred by the assessee are not found allowable u/s.35D of the Act.

4. Aggrieved by the order of the AO, assessee preferred appeal before Ld.CIT(A), who after considering the case of both the parties, dismissed the appeal filed by the assessee.

5.

Aggrieved by the order of the ld.CIT(A), now the assessee is further in appeal before us.

6.

The solitary ground raised by the assessee relates to challenging the order of the Ld.CIT(A) while upholding the disallowance of Rs.4,36,400/- u/s.35D of the Act made by the Assessing Officer.

7.

At the outset, it was submitted by the Ld.AR that the present ground is squarely covered by the decision of ITAT Ahmedabad “D” Bench in assessee’s own case in for AY 2013-14, order dated 31/05/2018.

Astron Paper & Board Mill Ltd. vs. DCIT Asst.Year – 2014-15 - 3 - The operative portion of the order of the ITAT contained in paragraph Nos.12 and 13 is reproduced as under:

“12.We have gone through the relevant record in the impugned order. The appellant had been engaged in the business of manufacturing of Kraft Paper. And appellant before the commencement of business had incurred expenses of Rs. 39,500/- in connection with Registration of Company, MO A & AOA Drafting & Printing etc. and Rs. 19,42,500/- in connection Registration and Stamp Duty Charges for Increase in the Authorised Capital of the Company for the commencement of the project of the company. And appellant had claimed Rs. 3,96,400/- being 1/5 of the above expenses under section 35D of the Income Tax Act. .

1.

Expenses deductible u/s. 35D are any expenditure incurred in connection with 1. Preparation of a feasibility report.

2. Preparation of a project report.

3. Conducting a market survey or any other survey necessary for the business of the assessee.

4.

Engineering services relating to the business of the assessee.

2.

Legal charges for drafting any agreement between the assessee and any other person relating to the or conduct of the business of the assessee.

3. Where the assessee is a company, also, expenditure:

1. 1. By way of legal charges for drafting the MOA / AOA or printing of MOA/AOA.

2. Incorporation fee.

3. For issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospe 4. Other expenses as notified by the Government from time to time.

13.

As we can see, above said expenditure are inconsonance of Section 35D and are allowable as per Income Tax Act. Therefore, we direct the A.O. to delete the addition of Rs. 3,88,500/-.”

8.

We have heard the Learned Representatives for both the parties. We have also perused the material placed on record, order of ITAT cited by the Ld.AR as well as the orders passed by the revenue authorities.

Astron Paper & Board Mill Ltd. vs. DCIT Asst.Year – 2014-15 - 4 -

9.

Since identical issue is involved in assessee’s case this year also, therefore, taking a consistent view and respectfully following the order of the Coordinate Bench, and with similar directions, the solitary ground raised by the Assessee is allowed.

10.

In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 05-03-2020 at Ahmedabad Sd/- Sd/- ( AMARJIT SINGH) ( SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/ 03 /2020 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-1, Ahmedabad 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

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