SAM FINE O CHEM LIMITED,MUMBAI vs. ACIT- 11 (1)(2), MUMBAI

आयकरअपील सं./ (िनधा"रण वष" / Assessment Year:2013-14) M/s. Sam Fine O Chem Ltd. ACIT-11(1)(2) बनाम/ 3rd Floor, B-Wing B-601, Paras Apartment, Rokadia Lane, Borivali West Mittal Court, Nariman Point Vs. Mumbai-400 092. Mumbai- 400 021. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAJCS-2469-P (अपीलाथ"/Appellant) (""थ" / Respondent) : Assessee by : Written Submissions Revenue by : Shri N. Padmanabhan-Sr.AR सुनवाई की तारीख/ : 09/01/2020 Date of Hearing घोषणा की तारीख / : 09/01/2020 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-18, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-18/IT-114/ACIT-11(1)(2)/2016-17 dated 13/04/2018 on following grounds of appeal :-

1. Whether registration & e-filing fees paid can be disallowed even when the fund flow has not increased but only authorized share capital has increased.

2 M/s. Sam Fine O Chem Limited Assessment Year :2013-14 2. If the expenses were treated as Capital Expenditure, then why it should not be allowed u/s 35D of the Income tax Act, 1961? 3.. When the expense is purely business-related expenditure, can it be disallowed under one pretext or another?”

, the sole issue that fall for our consideration is to determine the deductibility of expenditure of Rs.6.65 Lacs incurred by the assessee as registration fees / stamp duty to increase the Authorized Share Capital. Our adjudication to the issue would be as given in succeeding paragraphs.

3. Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged in the business of manufacturing of chemicals and pharmaceuticals, was assessed for year under consideration u/s. 143(3) on 23/03/2016 wherein it was saddled with stated addition of Rs.6.65 Lacs, treating the expenditure to be capital in nature. The Ld. AO opined that the said expenditure could not be allowed as revenue expenses since it was incurred to increase the share capital of the assessee company and therefore, expenditure on capital account.

4. The Ld. CIT(A), relying upon the decision of Hon'ble Supreme Court in the case of Brooke Bond India Limited vs. CIT (225 ITR 798) and Punjab State Industrial Corporation Ltd. Vs. CIT (225 ITR 792) confirmed the stand of Ld. AO. In the stated decisions, it was held that increase in capital results in expansion of capital base and therefore, the 3 M/s. Sam Fine O Chem Limited Assessment Year :2013-14 expenditure would retain the character of capital expenditure. Regarding alternative submissions that 1/5th of expenditure should be allowed u/s 35D, was also dismissed in view of the fact that expenses were not in the nature of preliminary expenses and business had already commenced. Aggrieved, the assessee is in further appeal before us.

5. We find that the assessee, in the written submissions, seek to rely upon the decision of this Tribunal in ACIT vs. West Gujarat Expressway Ltd. (2015 57 taxman.com 384). However, in the said decision it was admitted position that the expenditure was in the nature of preliminary expenses incurred towards extension of the business. No such facts emanate in the instant case. The assessee has also sought to rely upon the decision of Delhi Tribunal in DCIT V/s Raj Laxmi Stone Crusher (21 Taxmann.com 475). However, this decision does not consider the ratio laid down by Hon’ble Apex Court in the aforesaid decisions as relied upon by Ld. CIT(A).

6. The relevant observation of Hon’ble Supreme Court in Punjab State Industrial Corporation Ltd. Vs. CIT (225 ITR 792) was as follows: -

7. We do not consider it necessary to examine all the decisions in extenso because we are of the opinion that the fee paid to the