COMMISSIONER OF INCOME TAX Vs. UTKAL MACHINERIES LIMITED

JUDGEMENT

(1.) THE Bombay Bench-B of the Income-tax Appellate Tribunal has under Section 256(1) of the I.T. Act of 1961, stated this case and referred the following question .for our opinion :

(2.) THE relevant assessment year is 1969-70. THE assessee was a private company as denned in Section 3(1)(iii) of the Companies Act of 1956. By Act 65 of 1960, the Companies Act underwent an amendment and Section 43A was incorporated into the statute which required private companies to automatically get converted into public companies if certain conditions were satisfied. With a view to bringing the articles of association of the company in conformity with the provisions of the statute as applicable to a public company as defined in Section 3(1)(iv) of the Companies Act, the assessee obtained the services of a solicitor's firm, M/s. Crawford Bayley & Company of Bombay, and paid Rs. 12,620 by way of fees. During the assessment year, the fees were claimed as revenue expenditure. THE ITO treated the amount as capital investment and disallowed deduction. THE AAC upheld the rejection while the Tribunal in second appeal by the assessee accepted its contention and allowed the claim by treating it as revenue expenditure. Aggrieved by the reversal in the second appeal, the revenue has raised the present dispute.