AGS TRANSACT TECHNOLOGIES LIMITED,MUMBAI vs. DCIT CIRCLE 6(1)(1), AAYAKAR BHAVAN MUMBAI

Disallo Rs.10,22,08, 1.1. On the f Commissione Centre (NFAC of Rs. Rs.10 ground that th proposed IPO by the SEBI a and Filing C accrued to the 1.2. The said there was a O it was not considering th said sharehol be the ground 1.3. The said Court in the c fact that the s SEBI Fees, S Share Capital 2. No Interes On the facts a erred in not g refund since t 2. Briefly stated, fa consideration the ass providing end to en automation technolog income on 29.06.202 .The return of income assessment and stat (in short ‘the Act’) AGS Tra ITA owance of Aborted IPO Exp ,242/- U/sec 37. facts and circumstances of the case a r of Income tax (Appeals), National F C), erred in confirming the disallowance of 0,22,08,242/- U/sec 37 of the Income he same is capital in nature but ignoring O was aborted as the appellant could no approved the due date of 04.10.2019 and Cost was allowable U/sec 37 no endu e assessee as no new asset was acquired C.I.T.(Appeals) also erred in not conside Offer for Sale (OFS) by existing sharehold an IPO during A.Y.2021-22 and als he fact that the expenditure on OFS were lders and not by the Appellant and there d to disallow aborted IPO expenditure U/s C.I.T.(Appeals) erred in following the dec case of Brooke Bond India Ltd. 225 ITR said expenditure was towards Legal & P Stock Exchange Fees and not for increas l. st granted U/sec 244A on Tax Refund and circumstances of the case and in La granting any interest U/sec 244A on the the date of filing of income tax return. facts of the case are that during sessee company was engaged in nd cash and digital payments gy to its customers. The assesse 21 declaring total income at Rs.1 e filed by the assessee was selec tutory notices under the Incom ) were issued and complied ansact Technologies Ltd 2 A No. 4653/MUM/2024 penditure of and in Law, The Faceless Appeal f IPO expenditure tax Act, on the g the fact that the ot open the same d hence the Legal ring benefit has d. ring the fact that ders to Public and so erred in not e incurred by the efore that cannot sec 37 of the. cision of Supreme 798 ignoring the Professional Fees, se in Authorized aw, the said A.O. e due income tax g the year under n the business of s solutions and ee filed return of 111,94,45,140/- cted for scrutiny me-tax Act, 1961 d with. In the assessment order p Officer disallowed e relation to initial pub During the assessme the IPO was aborted created by way of t nature of the revenue the Act. But the Ld. for raising equity sh benefit spread over th Officer also rejected t Instead, the Asses successfully raised eq IPO in the subsequ assessee relied on th case of CIT v. Idea C Nimbus Communic 08.12.2011 and sub asset come into existe any enduring benef aborted IPO was all referred to the decisi of Brook Bond Indi and in the case Corporation Ltd. v AGS Tra ITA assed u/s 143(3) of the Act, expenses of Rs.10,22,10,000/ blic offer (IPO) for raising equit ent proceedings, the assessee d and hence no asset of endur those expenses, thus, expense e expenditure, same were allowa Assessing Officer held that exp hare capital were in the natu he future for long period of time the claim of the assessee that IP ssing Officer observed that quity share capital of Rs.501.81 uent financial year. On furth he decision of Hon’ble Suprem Cellular Ltd. 76 taxmann.com cation Ltd. (ITA No. 4244 o bmitted that when the IPO is a ence and there is no question of a fit and hence said expenses i owable u/s 37 of the Act. But ion of the Hon’ble Supreme Cou ia Ltd. v. CIT reported in 225 of Punjab State Industrial . CIT 225 ITR 792(SC) and ansact Technologies Ltd 3 A No. 4653/MUM/2024 , the Assessing /- incurred in ty share capital. contended that ring nature was es being in the able u/s 37(1) of penses incurred ure of enduring e. The Assessing PO was aborted. assessee had 1 crores through her appeal, the me Court in the m 77 and CIT v. of 2010) dated aborted, no new assessee getting incurred on the t the Ld. CIT(A) urt in the case 5 ITR 798 (SC) Development submitted that expenditure incurred directly related to the same falls under the further referred to th the case of Triveni sustained the disallow “4.2.3 It is fur Court of Delhi CIT 237 ITR professional c company is no 4.2.4. It has b forums that, t as per the FE expenditure d capital base: a) Eskayef Lim b) Union Carb c) CIT (vs) Kot In view of t expenditure Rs.10,22,10,0 services in c nature and th Act as revenu the Hon'ble Assessing Off Thus, the gr dismissed.” 3. The Ld. counsel pages 1 to 181. AGS Tra ITA d in connection with the issuan e expansion of the capital base purview of capital expenditure he decision of the Hon’ble Delhi Engineering Works Ltd. v. CI wance observing as under: rther notable that, as per the decision of H i in the case of Triveni Engineering Works R 639, wherein, it has been held tha charges incurred in connection with the m ot deductible as revenue expenditure. been held in the following decisions of va the expenditure incurred to maintain the ERA requirements can be construed to due to the fact that, the end result is restr mited (vs) DCIT, 71 ITD 419 (ITAT, Bomba bide India Limited (vs) CIT, 203 ITR 584 (C tak India Limited 253 /TR 445 (SC) the above, I am of the considered vie incurred by the appellant to th 000/- being expenses of certification fee connection with the issuance of IPO ar he same is not allowable as deduction u ue expenditure as per the above stated Supreme Court. Accordingly, the ac fficer on this issue is sustainable and he round of appeal filed by the appellan l for the assessee filed a Paper B ansact Technologies Ltd 4 A No. 4653/MUM/2024 nce of shares is and, hence, the . The Ld. CIT(A) i High Court in IT 237 ITR 639 Hon'ble High s Limited (vs) t, legal and merger of the rious judicial capital base be a capital ructure of the ay) Cal.) ew that, the he tune of es and other re capital in u/s 37 of the decisions of ction of the reby upheld. nt on this is Book containing

We have heard the relevant material that for inviting addit engaged certain lega draft read hearing pr Board of India (SEB crores comprising of (OFS) by promoters R vide letter dated 26.1 12 months. The as Rs.10,2208,242/- tow and SEBI filing fees, fees etc. in two years Particulars F.Y. 2018-19 (A.Y. 2019-20) F.Y. 2019-20 (A.Y. 2020-21) Total 4.1 However, the a during the assessm Resolution dated 16 Book page 82. The a proposed IPO during AGS Tra ITA rival submissions of the parti ls on record. Briefly stated facts tional share capital by way of IP al consultants and experts. Th rospectus (DRHP) with Securitie I) on 20.08.2018 for IPO aggre fresh issue of Rs.400 crores an Rs.600 crores. The SEBI approv 10.2018 with a time line to open ssessee incurred IPO related ward fees to merchant bankers, legal and professional fees and having details as under: Rupees Rs.7.38 crores Shown assets Balance 19) Rs.2.84 crores